E payment Review June 2017 by E-Payment Review

E-PAYMENT REVIEW

ADEWALE YUSUF ON STARTING TECHPOINT // OLUSEUN ONIGBINDE'S POWERFUL TAKE ON BUDGETS

Vol. 07. No. 02 June 2017

Big Data Drives Payments' Big Value Making sense of vast amounts of unstructured data is a necessity for digital payments

+ Interview: Ositadimma Ugwu, Principal Consultant, Dell EMC on Hadoop framework & how Big Data could enhance digital payments E-PAYMENT REVIEW June 2017

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E-PAYMENT REVIEW June 2017

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E-PAYMENT REVIEW Vol. 07. No. 02 | | Jun 2017

BROWN N. UGBAJA Editor ONAJITE REGHA Projects Editor SYLVIA NNENE NTIA Associate Editor Sub Editor KUSHIMO OLUWAYEMI Editorial Assistant LUCY AKOKOTU

Published by E-Payment Providers Association of Nigeria

In This Issue June 2017 Cover

14 Leveraging big data

The payments industry is increasingly driven by strategies and execution led by information insights generated by big data analytics. Payment providers in Nigeria need to avail this solution to boost industry benchmarks, reduce payments fraud occurrences and building a body of knowledge from customer data points in order to structure value-added services and bring opportunities for cross selling.

Interview 20 Smarter platform for immediate payments: Ositadimma Ugwu on how big data is challenging the relational data processing paradigms and making it easier for banks to target the unbanked, identify trends and react to fraud promptly.

4 | To Our Readers 6 | 10 Questions Uloh Kelechi Remmy Chief Operating Officer of Parkway Projects Talking Points 9 | Digits, FirstBank election, Heritage Bank on kids banking, cash-only small businesses losing profits 10 | Kiakia big data drive loans, Digital Encode's blockchain wallet, Paga gets partners, in short, PayU to snag more customers

HAPPIEST MINDS

11 | Fortumo expansion, MPesa to fan out across Af-

rica, Ghana interoperability deadline, accelerated drive, CCHub tour, Microsoft data centre, payment distrust 12 | Startup Nation Techpoint.ng's CEO on chronicling tech's impact in Africa 24 | Interview BudgIT founder on engaging with the government on its policies as reflected in the budget 26 | NeFF Insight Expert Briefing: Risks and threats of cryptocurrencies 27 | NeFF on losses to cybercrime in 2016, MMM's

impact on Nigerians, ransomeware alert The Risk Report 28 | Little trust in robot bankers, Africa Internet structure security guidelines, Australia tests gait biometrics, keyless car hack

31 | China solar panel record, clothing material that breats, looming impact of 5G networks, Internet of useless things NIBSS Fraud Report 32 | First Quarter 2017 fraud situation

29 | South Africa next-gen ID tech, threat level, banks struggle with customer IDs, Asus ROG Rapture

Leading Women 32 | Konga's senior product manager on diversity, leadership and pay on delivery

Next Up 30 | In brief, robotic glove for helping stroke patients, Evaptainers decouples refrigeration from electricity, dragonfly drones research

State of Payment 39 | Bitcoin's wild ride, PoS index, Schalke payment shirt 40 | Payment index, MEA fast rising payment star, in

short 41 | Cash fights back in India, Mastercard fingerprint enabled cards, Bluetooth card readers, ATM clocks 50 Last Word 42 | If chocolates can be dispensed, why can't cash

On the cover: Open Data. Your Data. Any Data.

E-PAYMENT REVIEW (ISSN: 2360-9818) is published quarterly by E-Payment Providers Association of Nigeria, 1 Rachael Nwangwu Close, Lekki Phase 1, Lagos. © Vol. 07 No. 02. June 2017. All rights reserved. The opinions expressed do not necessarily reflect E-PPAN’s policy. E-PPAN accepts no responsibility for views expressed by contributors. Printed in Nigeria. E-PAYMENT REVIEW June 2017

To Our Readers

BRANDESSENCE / DISRUPT-AFRICA PAGEONE

Parallel unstructured HERE IS THE STATE OF PLAY: A MORE EFFECTIVE MARKETING AND SALES solution for businesses is becoming the rage around the world. It involves using a system capable of analyzing structured and unstructured data to gain the power to understand customers’ behaviours and to create the finest customer engagement. It is big data and we might be arriving late to the hype. Big businesses around the world are investing heavily in big data with the goal of figuring out what products or service to promote, to which customers, when and via what channel. They want to provide a customized personal experience based on the vast amounts of data they collect from those using their products and services. One business that have mastered the art of big data utilization is Amazon, the electronic commerce and cloud computing giant. It is not just a coincidence when you visit amazon.com and click on a product and you see recommendations for other products that you may like to purchase. It is an engineered trick deployed by using big data analytics to determine what products you place inside your virtual shopping cart, which items you viewed recently or purchased in the past. The company calls this technique, “item-to-item collaborative filtering,” a method that uses structured and unstructured data sources to customize your shopping experience. Bottomline: Amazon uses big data to operate effectively in a fast-paced and competitive e-commerce environment where price and online advertisements dominate. People who frequent the information superhighway have grown accustomed to being tracked and know that their every move is analyzed. To be clear, much of that analyses is in the realm of structured data – information laid out in hierarchical arrangements like folders, rows and columns. It is a relatively simple matter to distillate actionable information from there because the structured schema of relational databases lend themselves to extracting and analyzing records. Big data advances it much more further. It involves wading through a data lake, which like an actual lake is a vast body of unstructured data that includes all manner of textual content - word documents, presentations, email, chat, SMS – video, audio files, and social media postings. In itself, Banks can analyze analyzing such unstructured data is very challenging the conversations – but very worthwhile. That dizzying amount of data has that happen on been found to hold significant business value for those social media about businesses that successfully tap it. their services, That is the focus of this edition. We tried to trace the products or comcourse of data analytics from thousands of years ago to petitors for sentithis moment where mining data with the assistance of ments, trends and intelligent software to predict outcomes in a way that demographics. is faster, better and cheaper has become a business technique. To help us make sense of the unfolding scenario and separate hype from intelligence, I had a very interesting interview with one of the few Nigerians with pedigree in big data and engineered systems - Ositadimma Ugwu, a principal consultant at the DellEMC office in Nigeria. He is a graduate of the University of Liverpool, University of Lagos, University of Nigeria, Nsukka and Walden University. He has worked in many Nigerian banks, had a stint with IBM before moving to DellEMC where he offers consultative leadership on cloud, infrastructure and big data solutions to business problems. His explanations about big data are heavily laced with apt propositions that the banking and payment industry can exploit to fix many of the challenges that face it today. In the ever revolving circle of poor customer care service we receive daily, Osita suggested that banks can analyze the conversations that happen on social media about their services, products or competitors for sentiments, trends and demographics. He tried to situate big data's transformative role in the banking sector within a broader discussion of financial inclusion. He showed how this could benefit the unbanked, not just from the ability to access banking products and services, but from a more, transparent, diverse and competitive market filled with efficient operators who have the capacity to manage risks and reduce costs. We also spent some time around Yaba, Nigeria's Silicon Valley, checking out the activities of such companies like Konga, Techpoint and BudgIT. You will find the interviews we got very illuminating. Do you know that 2017 marks 50 years of the ATM's job of constantly dispensing cash. For more, check out our Last Word. We hope you enjoy this issue.

E-PAYMENT REVIEW June 2017

Brown N. Ugbaja, EDITOR

WEMA BANK LAUNCHES ALAT, NIGERIA’S FIRST FULLY DIGITAL BANK L – R: Dele Adeyinka, Chief Digital Officer, Alat; Yinka Asekun, Chairman, Board of Directors; Segun Oloketuyi, MD/CEO, Wema Bank Plc; and Demola Adebise, Deputy Managing Director, Wema Bank Plc, at the launch of Alat Digital Bank by Wema Bank, at the Eko Hotel in Lagos, in May.

ENCOURAGING AMBITION Godwin Benson, the 27-year-old Nigerian systems engineer behind online tutoring platform Tuteria, has won the Royal Academy of Engineering Africa Prize for Engineering Innovation, walking away with £25,000 (N10m) in prize money at a ceremony in Nairobi, Kenya. Launched in 2015, Tuteria is an app that lets students connect to skilled tutors in their area. GROWTH FACTOR: Ridesharing startup GoMyWay has experienced a 150% increase in membership and a 300% increase in the number of seats offered recorded rides in 16 states in Nigeria last year. "We have seen an increasing acceptance of this concept of ridesharing by Nigerians and are more than glad to be at the forefront,” said CEO Damilola Teidi.

POWER UP YOUR MAG! Send an email

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E-PAYMENT REVIEW June 2017

10 Questions Uloh Kelechi Remmy Chief Operating Officer of Parkway Projects on risk management, technology around e-payment and his philosophy in life TELL US ABOUT YOURSELF AND HOW YOU GOT TO THIS POSITION? I am a graduate of Economics from the University of Nigeria, Nsukka and I have masters in economics and, banking and finance from the University of Lagos and Bayero University, Kano, respectively. I joined Parkway Projects in 2008 as head of internal systems (shared services), and this is my ninth year with the firm. My responsibilities include overseeing human capital, risk and compliance management. People say I am a proven administrator with competence in organizational development and strategy. I have undergone trainings in information technology security, audits, compliance and standards. WHAT DOES THE TYPICAL LIFE OF A HUMAN CAPITAL AND RISK MANAGER LOOK LIKE? Outside leadership in other spheres, my job involves people. Today, people remain the greatest asset of any organization; they are no longer seen as cost or expense of businesses as in the past. Hence, I am tasked with harnessing and aligning human capital with the vision and objectives of the organization. In doing this and obviously as human nature is imperfect, there arise some challenges and gray areas and I try to identify these risk factors and mitigate them successfully.

ULOH KELECHI REMMY

WHAT IS THE MOST CHALLENGING ASPECT OF YOUR JOB AND WHAT IS THE MOST REWARDING? The most challenging is obviously when it comes to terminating appointments. We tend to do it in a way that encourages the person being terminated to understand that a closed door doesn’t imply a closed window. Also when it comes to conflict resolution, we apply wisdom to balance the inputs from all sides. The most rewarding aspect is when we meet set goals, objectives and budgets. INNOVATIONS ARE CHANGING, DISRUPTING OR TRANSFORMING OUR WORLD. HOW WOULD YOU DEFINE YOUR COMPANY’S APPROACH TO INNOVATION? 6

E-PAYMENT REVIEW June 2017

Change, we all believe, is the only constant thing in life. We are a creative and innovative house, so we have no other option than to keep innovating, otherwise we will become irrelevant to the sector. Parkway has remained futuristic since inception and today we are changing the landscape of business banking and payments with our innovative offerings. THERE ARE A LOT OF GREAT IDEAS AND TECHNOLOGY AROUND THE E-PAYMENT SPACE, WHAT TRENDS AND CHANGES ARE YOU WATCHING THAT ARE AFFECTING THE INDUSTRY? Digital financial services and blockchain technology are rapidly evolving and may eventually disrupt digital banking and the payments space. THE PROMISE OF THE INTERNET OF THINGS (IOT) AND BIG DATA ARE HUGE. SHOULD WE BE CONCERNED ABOUT SECURITY AND PRIVACY PARTICULARLY WHEN IT COMES TO AREAS LIKE

HEALTHCARE? Well, irrespective of the challenges and pitfalls we see or anticipate, big data and the Internet of Things (IoT) hold promises in the areas of enhancing data exchange. However, we should begin to promote data encryption and security across devices and networks. Subscribers must prevail on solution providers to publish their privacy policies and their terms and conditions. WHAT ONE GROUNDBREAKING THING DID YOU THINK WOULD HAVE HAPPENED IN THE E-PAYMENT INDUSTRY BY NOW? Though payments growth is currently a rising phenomenon, but we all anticipated that mobile

We all anticipated that mobile money would have deepened strongly by now to be used for every transaction.

money would have deepened strongly by now to be used for every kind of formal and informal transaction. We also expected stronger growth in the area of digital financial inclusion but I believe the innovative e-payment offerings and gateways from fintech might enhance the predicted trend. WHAT IS YOUR PHILOSOPHY OF LIFE? I believe strongly that we have all been bestowed with tremendous potentials, and that if we could potentially unleash a quarter of those potentials, we would have begun a journey to solving some of humanity's intractable problems. HOW DO YOU UNWIND AFTER A LONG DAY AT THE OFFICE? I play badminton and scrabble. WHAT DO YOU WISH YOU HAD MORE TIME TO DO? I believe each one of us can only do with 24 hours a day, there’s no alternative. I try to balance the competing needs for my time to ensure that none suffers.

E-PAYMENT REVIEW June 2017

Talking Points Digits

N62.7 trillion Value of transactions on various digitals channels in Nigeria in 2016, according to the Nigeria InterBank Settlement System Plc (NIBSS).

Teaching kids about smart banking in the age of 'invisible' money

TEACHING CHILDREN TO BE SMART ABOUT MONEY AND BANKING MIGHT BE one of the best investments a financial institution can ever make. The skills they learn now will help shape their future spending and saving habits. It would also put them on a career path in banking. Heritage Bank is taking the lead on that by exposing school pupils (5-7 years old) to banking services. The programme, part of the bank’s Children Banking Month, tagged: My Day as a Banker, was held at its corporate head office with pupils from Hilltop Grade International School, Lekki, Lagos. From customer service, foreign exchange, corporate banking to human resources, the pupils were involved in attending to customers who reportedly were amazed at the skills the children exhibited in addressing their banking needs after the initial short induction given to them.

N5.83 trillion Value of cheque transactions in 2016 for banking and other financial transactions in Nigeria, according to NIBSS.

RECYCLING

HERITAGE BANK

FirstBank re-elected to PCI SSC board of advisors

FIRST BANK OF NIGERIA has been re-elected into the board of advisors of the Payment Card Industry Security Standards Council (PCI SSC) for the third consecutive time. PCI SSC is an open, global forum for the development of payment card security standards. It works with organisations around the world to protect businesses and consumers against data theft by continuously developing new payment security standards, cyber security training courses, and certification programmes. Lara Nwokedi, Head of Information Security Operations, has been representing FirstBank on the board. A payment card industry professional, security lead auditor and implementer, she has many years’ experience in information security and has led several initiatives in the Bank. FirstBank has been the only African Bank elected to the PCI SSC Board since its inception. The Bank’s re-election into the Board underpins its commitment to the protection of customer assets and information.

BETTER BUSINESS OUTLOOK

Cash-only small businesses making big mistake SMALL AND MEDIUM BUSINESSES that ignore next-generation payments technologies like cards, mobile, online banking, wire transfers and cryptocurrencies are losing out big time on huge profits. Research by Expert Market reveals that SMEs could be losing out on over $30,000 (N9m) profit a year because they don't accept digital payments. The report crunched business transaction figures in 2015-2016 and consumer attitudes to purchasing to find out how much additional revenue businesses risk losing out on by operating as cash-only. With card payments predicted to constitute 65 per cent of all consumer transactions by 2025, businesses who operate without offering their customers cashless alternatives risk losing over $45,000 (N14m) per year from

missed sales opportunities. “Our findings highlight the need for cash-only businesses to adapt in order to remain competitive or miss out on huge profits by choosing not to keep up with consumer buying behaviour trends," said Adelle Kehoe, Head Expert Market. "As the millennial generation comes of age and their purchasing power becomes stronger, businesses will have no choice but to pay attention to their preferences.” While carrying cash is becoming considered old-fashioned and outdated, in Africa problems persist. Some underlying reasons for SMEs failure to accept digital payments are that they are not interested messing with the familiar flow of their cash-only system, the general lack of access to financial services in many areas and

insufficient banking infrastructure, particularly with regards to new digital channels for payment acceptance and financing. This has led to a significant impact on how business is conducted in many places. The implementation of an integrated digital financial system will play a significant part to eliminate challenges that exist with SMEs resorting to payments in cash. Backed by advanced in platform capability and the omnipresence of open APIs, banks now have the opportunity to build more open and interoperable systems that will allow businesses and their suppliers to transact seamlessly. New payment technologies -- like card readers and software that integrate with smartphones and tablets -- make the switch to accepting electronic payments easier. E-PAYMENT REVIEW June 2017

Talking Points CARRIER BILLING

In Short

KiaKia using big data to offer loans access PAYMENT STARTUP KiaKia is helping make direct and peer-to-peer consumer and SME loans accessible and obtainable for Nigerians without credit histories through its online proprietary credit scoring and risk assessment algorithm. The company aggregates digital data and utilises machine learning, digital image forensics and psychometry to perform credit scoring and risk assessment services, to qualify and grant consumer and SME borrowers loans. The process is conducted entirely online, with application, processing and disbursement taking under three hours to complete for first time users. For repeat or returning users, it takes less than 15 minutes. With no marketing spend, KiaKia now has almost 5,000 registered borrowers on its platform, and has seen hundreds of loans disbursed and repaid. The whole basis of the service is the lack of access to loans faced by many Nigerians. “The level of interest in our peer-to-peer loans has been incredibly impressive, with new individual lenders signing up each day,” Olajide Abiola, KiaKia co-founder and chief executive officer (CEO), told Disrupt Africa. “A number of the DMBs and SME associations have approached us for partnerships."

GLOBACOM RECORDed the highest data penetration rate among the four operators present in the country in the first quarter of 2017, the Nigerian Communications Commission has revealed. Glo had a total of 27,021,200 internet users, Etisalat came second with 68% of its subscribers’ pool at 19,621,086. while Airtel and MTN had 56% and 51% respectively.

MOVING TRADE TO THE CLOUD Interswitch Transnational has partnered

Misys, a provider of lending, treasury, trading and risk management solutions to deliver a proprietary system to help banks deliver seamless trade finance services to their customers. Gansirey Seck, Regional Manager, Misys West Africa with Mitchell Elegbe, GMD, Interswitch during the launch of the partnership in Lagos. WALLETS

Digital Encode doubles down on blockchain INFORMATION SECURITY MANAGEment and assurance services company Digital Encode has leveraged blockchain technology to build a mobile peer-to-peer payments system that would allow anyone to send and receive digital assets or tokens straight from their smartphone without any financial intermediary. The product called Shift Blockchain Wallet will allow users to hold digital assets (fiat currencies, remittances, stocks, bonds, gift vouchers, tickets, air miles, coupons and anything of value) in the same wallet. For the new revolutionary wallet, the company said only an android device and Internet access are needed. Users have to download the app from Google Play Store and create a wallet. They will be given an address (there is no concept of an account), which serves as public key

and functions much like a regular bank account to receive and send digital cash. The wallet can be loaded using Internet banking or direct cash deposits into a trust account held by the bank. The transaction is automatically recorded on the blockchain. The service can convert cash into electronic naira, anchoring the value to the price of the Nigerian currency. Digital Encode said the wallet is the most secure payment system presently because it leverages the distributed ledger technology for transactions. Unlike traditional payments systems, it uses public and private keys and every transaction is signed locally and transmitted to a blockchain node without revealing wallet seed or private keys. The company employed PIN protection to eliminate the need of entering a long password for transactions.

Paga ramps up partnerships

WPSAS / BRANDESSENCE / TEKEDIA

Independent payment processor, Paga is continuing its push for profitable growth with a rash of partnership agreements that would extend its services to more customers. It recently inked a deal with NIPOST as part of the shared agent network framework to provide financial services points at post offices across Nigeria. The venture will be given priority in areas where banking services are limited or otherwise difficult to access with initial services on offer to include deposits and withdrawals from bank accounts and mobile money wallets, utility bill payments, and airtime recharge. Paga has also launched a partnership with pan-African fintech company, MFS Africa, to connect Paga clients and Nigerian bank account holders to remittance senders from around the world. With the collaboration, Paga wallet users can receive transfers from millions of other mobile money users across Africa, or from any money transfer operator connected to the MFS Hub. 10

E-PAYMENT REVIEW June 2017

GOOGLE WANTS Nigeria to simplify taxes and reduce fees involved in laying fibre optic cables to encourage development of infrastructure for the technology industry. Country manager, Juliet EhimuanChiazor told Reuters boosting the technology industry would help diversify Nigeria's oildependent economy.

PayU to connect more businesses to online payment ONLINE PAYMENT SERVICE provider, PayU, has said that it is increasing its efforts to connect businesses to Nigeria’s online payment market this year. This is expected to increase annual online payments in the country to over N200 billion ($623m) against the N167billion ($520m) last year. “In order to pursue PayU’s aggressive expansion in the online payment market in Nigeria, we have identified businesses that can benefit from our global expertise across 16 markets where we offer over 250 payment options,” said Juliet Nwanguma, Manager of PayU Nigeria.

6.1 billion Number of EMV cards in circulation worldwide as at the end of 2016, according to EMVCo. That represents an increase of about 1.3 billion cards over 12 months. The data also indicates that 52.4 percent of all card-present transactions globally were handled with EMV tech.

CARRIER BILLING

Fortumo expands African coverage

BRANDESSENCENIGERIA

FORTUMO HAS EXPANDED its carrier billing services to three new African markets. More than 79 million mobile phone owners in Algeria, Ghana and Tanzania can now make payments for digital services. All three markets where Fortumo recently launched have extremely low credit card penetration: Algeria at 6%, Ghana at 0.9% and Tanzania at 0.7%. This means people there can access online content, but were unable to pay for premium content. Carrier billing will now allow them to buy those contents conveniently through their carriers with payments deducted from their airtime balance or charged to their monthly phone bill. In the Middle East and Africa, carrier billing through Fortumo is now available to more than 600 million people in 24 countries. It services app stores and media providers like Google Play, Spotify, Sony and gaming companies like Gameloft and Kinguin with carrier billing, local market insights and facilitates relationships with mobile operators.

STARTUP CHALLENGE Seedstars World‘s first challenge in the Middle East and North Africa (MENA) region held at the Mediterranean School of Business in Tunisia with e-commerce startup, Favizone, a go to personalization solution for all e-commerce brands emerging winner. WanaGames and Dabchy placed second and third respectively. Favizone will represent Tunisia at the Seedstars Global Summit in Switzerland next year where it’ll compete with startups from all over the world for up to US$500,000 in equity investment.

MOBILE PAYMENT

DIGITAL POLICY

M-Pesa to cover more of Africa MILLIONS MORE SMARTPHONE users in Africa will soon have access to basic banking services like borrowing and saving as the popular mobile financial services platform M-Pesa expands to cover more countries. Safaricom has been looking to expand M-Pesa for some time, but its hands were tied by the wishes of its parent company, Vodafone. The company recently transferred its 35 percent share in Safaricom to its South African subsidiary Vodacom, retaining only a 5 percent share. South Africa wanted Vodacom to lead the charge for Vodafone’s African expansion, so its government opposed to expansion moves by Safaricom. The company is now free to expand as it chooses. Some markets have already shown interest. Liberia, Ethiopia and Togo have been courting Safaricom for some time. The company is thinking

even bigger, with an eye on all African markets where similar products previously failed. “For us, the obvious advantage is that it [the Vodafone/Vodacom deal] now gives us an opportunity to try some stuff overseas,” said Bob Collymore, who has led Safaricom since 2010. The CEO did not anticipate that much capital investment would be necessary for expansion. Rather, the company has invested in key skills over the past decade that it believes will translate into success in neighboring markets. The $2.6 billion share transfer deal also removed Vodafone’s power to veto selection of a chief executive for Safaricom. Shareholders must agree on terms for guiding future selections. Collymore said he hopes to start talking deals by the end of the year.

Acceleration

PitchDrive Tour

Africa data centre Declining trust

An exclusive pan-African post-acceleration programme, XL Africa has been launched by the World Bank Group for African digital startups. It is aimed at startups that have achieved product-market fit, demonstrated traction and are bringing in revenue - but want to push for real growth and source investment.

Fifteen African startups would raise a collective $20-million in Series-A funding from European funders when startup tour PitchDrive begins August 14,. The three-week tour is an initiative of Nigerian technology innovation centre Co-creation Hub (CcHUB) which has partnered with Google for Entrepreneurs.

Microsoft will open data centres in Johannesburg and Cape Town, South Africa to offer easier and faster access to cloud services. The tech giant said 2018 will see the start of enhanced and faster user experience boosted by utilising cloud services. Some of the products Microsoft intends to deliver include Office 365, Azure and Dynamics 365.

The potential gains of e-commerce are not spread evenly around the globe as a global survey by Ipsos, CIGI & and UN agency, UNCTAD found that 49% of Internet users have concerns about privacy with people in the Middle East, Africa and Latin America citing lack of trust as their main reason for not shopping online.

Interoperable mobile money in Ghana by Nov GHANA IS WORKING to meet its November 2017 timeline for the implementation of mobile money interoperability. The Ghana Interbank Payment and Settlement Systems (GhIPSS) was tasked with providing the platform for mobile operators after a botched agreement with telecom company, Sibton Switch Systems, which won a controversial GHc 4.6 billion bid from the Bank of Ghana to oversee mandate. CEO of GhIPPS, Archie Hesse, told newsmen in Accra that the absence of interoperability was a stumbling block to the goal of enhancing financial inclusion through mobile money.

E-PAYMENT REVIEW June 2017

Startup Nation

UNFOLDING THE UNTOLD How Techpoint became top trending startup news platform for entrepreneurs

Adewale Yusuf, founder & CEO of Techpoint.ng on why entrepreneurs believe that getting covered by Techpoint will “make” their startup

BY LUCY AKOKOTU

Can you tell us a little about yourself? Where did you come from personally and professionally? I'm a visual storyteller, a photographer with interest in people's development. I'm from Osun State but I was born and that was were I grew up before moving to Lagos. Every website has a story behind it. Tell us a little bit about the beginnings of Techpoint.ng. What does it stand for and what was the motivation behind starting the company? I have been blogging for tech for six years. I worked with a platform called Rotechbit but something happened to the platform, I left and went fully into photography. One day I wanted to read up something on tech and I discovered there was nothing. You could only read about a few people and I believe everybody needs to have a voice and be given equal opportunity. I said okay, maybe we will start this. Techpoint was built out of the need to have a platform that discusses the day to day activities of technology development in Africa. We follow the journey of startups from the idea stage to the growth stage. There is no Nigerian tech story you look for that you won’t see on Techpoint. We are an archive and engine for startups and technology entrepreneurship. We started it and it has been fun and challenging. How does your work as a photographer enhance the work

E-PAYMENT REVIEW June 2017

you do at Techpoint? When I started Techpoint, the primary concept was to bridge the gap between tech and photography because I discovered there was something there. At the early stage, we did a post on Jobberman and I took a picture while doing an office tour. When I released the post, the website almost crashed because of the traffic coming to it from everywhere. It turned out that for the first time, people could actually see a picture of a startup. People made comments that showed they believed that Jobberman was real and was run by real human beings and not bots. That built a trust and I think trust is the primary thing needed in this business. Since then, we leverage photography a lot for our stories. When we interview people, we make sure to put pictures to enhance the visual quality of the site. Earlier you said the role of Techpoint is to chronicle the impact of technology in Africa. Can you paint a picture of how you are doing that? Africa is still at the emerging stage of technology and we have a long way to go trying to figure out everything. We are chronicling the tech development in Africa by following the stories day by day. We write about what is happening and educated people by simplifying the technology story in a way that everybody can understand. We don’t write big tech language that people will

have trouble comprehending. We are the biggest in Sub-Saharan Africa and we tell a story one at a time. We once went to Tamale in Ghana just to cover a story about a woman who was using technology to help pregnant women and children in her community. Once it is an African story, we write about it because we believe that this is the journal we need in building the future. You are giving exposure to new ideas and new applications. How does it enhance the fortunes of the entrepreneurs featured on your website? More than forty percent of the startups we featured received funding from investors. Even the bigger ones that didn’t get funding gained in the way we pushed their investors. We have people from Silicon Valley in the US that actually focus on tech. They use Techpoint to know what is going on, then invest in these people. Every startup we have put up has gotten exposure to consumers who will use their app. They have also gotten investor interest because for us to feature you, you have to be doing something meaningful. They have had lots of support from educational institutions who read about them on our site. I know some people that the World Bank and Facebook reached out to because we covered their story. People in different parts of the world visit the website and that is a lot of exposure for people we feature. How and where do you discover your stories? From other blogs, user submissions or do you actually research these startups? On Techpoint.ng, we have a form you can fill if you have a startup and it is free. Every day at 9 am we feature a new startup but we still go beyond that. We do a lot of research and do detailed reviews about companies by going over what they do. That is how we get most of our stories. We have heard people say we gave them a hint of something going on that they didn’t know about. You will get to hear about many startups first on Techpoint. What types of new innovations interest you the most? Innovations that address people's immediate problems. In the overcrowded, hyper-connected world of the Internet, what makes an enterprise stand out from the noise and become a success? Integrity. Being truthful to their vision and mission without compromise.

DIYLAW

Looking back to when you started, what has been the biggest milestone for Techpoint? The experience has been challenging but it has

More than 40% of startups we featured received funding from investors. the ones that didn’t get funding gain in the way we pushed their investors. Every startup we have featured has gotten exposure to consumers who will use their app.

also been fun. The challenging part is that every day we look for a new way to solve a problem, to engage people and to contribute to this emerging ecosystem. We just don’t write a story without validation. Back then there were times I felt I was just wasting my time and that maybe I should give up but as I persevered it became fun. One thing I am grateful for is the people I work with; my team. I tell people whatever thing they see that we are doing is the manifestation of us. If anything happens, we go back to the same one room and build it all up again. The biggest mile is not in any award but the amazing people I work with. We moved from one person to two people; from renting a chair in one small room, we kept growing. We all work towards the same goal. Most startups have their fair share of challenges. Have you got any suggestions for anyone who wants to follow a similar path as you? Be ready to go alone. Don’t just jump at anyone that wants to be a co-founder, partner people who share your dream. Build a team because you can’t afford to have staffs. As for challenges, the running cost for businesses in Nigeria is high. We spend a lot on fuel and salaries. There is no support from anybody, not even the government. It will be nice if we have local support but Nigerian investors are not funding these startups. The foreign investors that we are getting here are not really major players for whom funding may not even be the primary goal. They are trying because what they give makes the system to work. Another challenge is mentorship. We don’t see people that have really done it. There are no superheroes because the people you look up to also haven’t mastered the system. How do you get funding to sustain Techpoint? We started with friends and family but we sustain ourselves through revenue and our small savings. We focus more on revenue. Though we do have opportunities to make money but we are careful about how we do that because we recognize that we are a media company. What is your take on tech startups adoption so far? It’s gradual, steady and growing. The primary thing we discovered is a lack of trust in what tech has to offer. People hardly trust online platforms and that’s why in the ecommerce sector pay on delivery has become a norm, which defeats the essence of electronic commerce. People want to see the product before paying. They will queue at the ATM then go to a mall to buy stuff and pay cash when they could have gone to pay with their cards. Why is that? Trust. The everyday persistence, growth and the success of these startups depend on people like us who show people the benefits they could derive from these startups. The adoption is not as encouraging as it should be but there is hope that we would get there. What is next? What does the future look like for Techpoint? We are planning our ‘invent tech point inspired’. What is next for us is that we are here to grow. We are a startup that writes about startups because we believe in this space which is why we will continue to invest our time and energy in it.

Quick Take

MARTIN GICHERU set up Techweez. com six years ago, today it has grown to become one of the top 100 gadget blogs globally. He speaks on his journey as an online publisher in Kenya. WHEN WAS TECHWEEZ FOUNDED AND WHAT WAS YOUR VISION FOR IT? Techweez was started in 2010 as a one man show; back then there were no commercial bloggers and I started it hoping that this could put an end to the situation. Big blogs like Engadget, TechCrunch and Mashable inspired me to start Techweez. WHICH CHALLENGES DID YOU FACE WHEN YOU WERE STARTING OUT? I ran Techweez for many months with zero revenue and no other tangible source of income. Later, things started coming together nicely for the website. Brands started realizing the value of working with me and other bloggers. TAKE US THROUGH THE GROWTH OF TECHWEEZ. After brands started working with me, I got an extra hand and we became a two man team. We filled a void that existed where traditional media didn’t give emphasis on tech coverage and would always report the business side of things. We found that companies with tech products warmed up to us commercially. We were reaching their target audience without the fluff. We realized we were a force to reckon with when we started getting great interviews from global representatives of multinational companies. HAS TECHWEEZ RECEIVED FUNDING? In April 2015, Techweez received an investment from a private investment firm to improve on the product and scale. WHAT ARE YOUR FUTURE PLANS? As an entrepreneur I have a lot of work to make the current product what I want it to be. Future expansion plans would include venturing into new verticals in digital media. WHAT IS YOUR VIEW OF ONLINE PUBLISHING IN KENYA? Online publishing is just starting out in Kenya (it is barely five years old). There shall be disruptions and this will come from dreamers who are willing to take risks in the sector. We will continue to see new players come in and make it big. The opportunities are immense and this is especially due to the fact that Internet access in Kenya is growing quite fast.

-- hapakenya.com E-PAYMENT REVIEW June 2017

COVER

THE HADOOP ELEMENT

FUELING PAYMENTS VALUE WITH BIG DATA ANALYTICS

RACONTEUR

BY BROWN N. UGBAJA

E-PAYMENT REVIEW June 2017

he journey to Big Data follows a long road that stretches far from the past. In 1960, Jean de Heinzelin de Braucourt, a Belgian geologist who was exploring what was then the Belgian Congo, discovered a dark brown length of bone, the fibula of a baboon, with a sharp piece of quartz affixed to one end that was thought to be one of the earliest pieces of evidence of human data storage. Called the Ishango bone (it was found in the area of Ishango near the Semliki River on the border between modern-day Uganda and Congo), this ancient artifact dates to at least 11,000 years ago. It supposedly is one of the first examples of humans conceiving of - what we today think of as - numbers. Engraved on the boneâ&#x20AC;&#x2122;s surface are three rows of groups of notches. These rows of notches would later be understood to indicate 9, 19, 21, 11; 19, 12, 13, 11; and 7, 5, 5, 10, 8, 4, 6, 3. Scientists believe that Palaeolithic tribespeople made those notches to keep track of trading activity or household supplies. They would compare sticks and notches to carry out rudimentary calculations, enabling them to make predictions such as how long their food supplies would last. What this teaches us is that Big Data is not a new or isolated phenomenon, but one that is part of a long evolution of capturing and using data. From the invention of the abacus in 2400 BC, the construction of the Library of Alexandria, to the discovery of the Antikythera Mechanism, mankind has always understood the importance of storing information and finding a way to process it. The idea of business putting data analysis to use for commercial purposes came in 1895 when Richard Millar Devens, in his Encyclopaedia of Commercial and Business Anecdotes, described how the banker Henry Furnese achieved an advantage over competitors by collecting and analyzing information relevant to his business activities in a structured manner. Mankindâ&#x20AC;&#x2122;s utilization of information has included the idea that each activity creates an ever-expanding body of knowledge and that a system with the ability to store and analyze the information was a valuable necessity. Long before computers, people tried to secure the information available to them in reusable formats. That was essentially why libraries were built - to store all the academic and popular works of value being produced. But libraries presented their own challenges. Printed works needed to be stored and that required buildings and shelves. And as more works of value are churned out by writers, researchers, companies and government, there was need for more buildings and shelves. The scenario that more library infrastructure presented for the future led to concerns among those tasked with the preservation of the information stored there. In 1944, Fremont Rider, a librarian at Wesleyan

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University in the United States published a paper in which he attempted to quantify the amount of information being produced. He observed that at the speed written works were been churned out, American libraries would have to double their capacity every 16 years. He speculated that the Yale Library, by 2040, will contain 200 million books spread over 6,000 miles of shelves. Picture what that really would look like – rows and unending rows of bookshelves stretching tens of thousands of miles with no end in sight. Rider’s warning was that something more innovative needed to be done. A decade and half before Rider made his assertion, a German-Austrian engineer had invented a method of storing information magnetically on tape. People were now looking beyond books for information storage. Information of value could be compressed and stored in retrieval and ubiquitous systems. Books themselves can now be stored digitally. There was opportunity to transport music out of the music halls and carry it to the four corners of the world. The material he fashioned would be used many years later for the inside of music cassette tapes while the principles he developed would inspire steady scientific and engineering progress that resulted in the creation of the magnetic drum, selectron, tube and ferrite-core memory. But it was at the University of Manchester that the first random access storage device was invented, and the Williams-Kilburn tube was the piece of hardware that did it. Random Access Memory allowed data to be read and written in the same amount of time, paving the way for modern RAM, which is vital for fast speeds and heavy workloads. Data storage technology has transformed completely since the initial models from those efforts. Today, the hard disk drive remains the top choice for storage. It has also allowed data to be stored in an easily accessible format and across a large number of linked storage devices. Since its inauguration as a huge unit containing only 3.75 megabytes in 1956, it has gone through many incarnations to arrive at its current state as a portable multi-terabyte device that quickly attaches to any computer system and also has the capacity to store all kinds of information audio, image, text and video. But storing information in the hard disk will not be enough to handle the volume of data that was being generated on daily basis by businesses, government offices and individuals. This led to the building of feature-complete computing facility with infrastructure and storage elements, as well as secured backup power that became the data centres we know today. The United States government commissioned the world’s first data centre in 1965 to store 742 million tax returns and 175 million sets of fingerprints on magnetic tape. An infrastructure to connect computers to each other came in 1977 courtesy of Datapoint, which developed ARCNET (Attached Resource Computer Network) for their Datapoint 2200 computers to connect to a shared floppy data storage system via coax cables. It eventually conceded to the much more practical Ethernet, which was standardized in 1985, but laid the thought work and foundation for a functional computer network consisting of many microcomputers. The advent of the internet, which reached an inflection point toward mass-market adoption in the mid-1990s, brought a feeding frenzy to data 16

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center adoption in the late years of the decade. As companies began demanding a permanent presence on the Internet, network connectivity and colocation services grew into a business requirement, Internet providers and hosting companies and quickly growing internet data centres consisting of hundreds and often thousands of servers were created. The data centre as a service model became common for most companies and they are building more and more of these centres all over the world. By the end of 2017, the number of data centres will reach 8.6 million while overall, the space occupied by these centres will grow from 1.58 billion square feet in 2013 to 1.94 billion in 2018. Seven years ago, Software-as-a-service (SaaS) began to shift the need for computing resources from an infrastructure, hardware and software ownership model toward a subscription and capacity on demand model. This model favoured cooperation between network infrastructure and data centre operators to deliver a huge increase in required data bandwidth. Cooperation between several infrastructure companies and large internet companies led to the design of distributed cloud data centres to offer cloud computing. As these technologies evolved, they have allowed for increasingly capacious and efficient data storage, which in turn has allowed increasingly sophisticated ways to use it. These include a variety of business applications, each with unique storage demands. Whether it is for a family photo album, a computer programme, or a company’s business-critical systems, data storage has become a must-have for nearly everyone. They want and need to download, transfer and manage huge amounts of data from the comfort of our own homes, at government offices, in business transactions, for long-term data archiving and for backup and restore or disaster recovery has pushed data daily, on a scale never thought imaginable by the pioneers who worked to develop storage decades ago. The inventor Nikola Tesla once told a journalist that when wireless technology is “perfectly applied, the whole earth will be converted into a huge brain.” With hundreds of thousands of megabytes, gigabytes and terabytes being sent, transferred and downloaded every day across the internet, Tesla’s prediction has come true. It is manifested in the size of data that exists in the world today. In 2010, Eric Schmidt, executive chairman

“THE ABILITY TO TAKE DATA - TO BE ABLE TO UNDERSTAND IT, TO PROCESS IT, TO EXTRACT VALUE FROM IT, TO VISUALIZE IT, TO COMMUNICATE IT - THAT’S GOING TO BE A HUGELY IMPORTANT SKILL IN THE NEXT DECADES.” HAL VARIAN GOOGLE’S CHIEF ECONOMIST

of Google's parent company Alphabet (then the CEO of the search company) raised concerns about the ballooning size of data being generated cautioning that "there were 5 exabytes of information created by the entire world between the dawn of civilization and 2003. Now that same amount is created every two days." To fully understand Schimdt’s point, you need to wrap your mind around what an exabyte of data is. It is one of the terms used in the world of computing to describe disk or data storage space, and system memory. Just a few years ago we were describing hard drive space using the term megabytes. Today, gigabytes and terabytes are the most common terms being used for the same description. According to the IBM Dictionary of Computing, a gigabyte is approximately 1,000 megabytes. To put it in some perspective, one gigabyte could hold the contents of about 10 yards of books on a shelf. A terabyte on the other hand is approximately 1,000 gigabytes. It could hold about 300 hours of good quality video or 1,000 copies of the Encyclopedia Britannica. One thousand of it will give you a petabyte, enough storage space for 20 million 4-door filing cabinets full of written matter or 500 billion pages of standard printed text. That brings us to an exabyte and this is where it gets quite confusing because it is hard to visualize what it could hold. In fact, there is not much to compare an exabyte to. The quantity of data that Schimdt mentioned would be equal to all of the words ever spoken by mankind. It is even further mind boggling when you consider that data storage terms do not end there. The IBM Dictionary still outlines storage spaces like zettabyte, yottabyte, brontobyte and geopbyte. Finding equivalence for these terms could prove impossible. Folks at IBM believe that it would take approximately 11 trillion years to download a yottabyte file from the Internet using high-power broadband. And that so far the World Wide Web as the entire Internet almost takes up about a yottabyte. How do we then make sense of these vast quantities of data and make actionable executable insights? Two words: Big Data. It is the computational process of exploring and uncovering patterns in large data. A subfield of computer science that is all the rage in the world today because of its capacity to blend many techniques from statistics, data science, database theory and machine learning. “The ability to take data - to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it - that’s going to be a hugely important skill in the next decades,” Hal Varian, Google’s Chief Economist, told the McKinsey Quarterly. As he predicted, the term “Data Science” has emerged recently to specifically designate a new profession that is expected to make sense of the vast stores of big data. Big Data encompasses everything from digital data to the records collected from years and years of paperwork issued and filed by businesses and governments. In lay man terms, this large volume of data is analyzed to show trends and patterns of users to revolutionize product and service delivery. “Each day, we create 4.5 quintillion bytes of data from a variety of sources—from climate information to posts on social media sites, purchase transaction records and medical images,” said IBM during its annual Interconnect conference in March. This data, the company said, is an indicator of the resource available for use by

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governments and businesses to make them more proactive to the needs of citizens and customers respectively. Using the science, organizations (businesses, banks, governments, security agencies, the United Nations) across all verticals have the potential to extract value from their data and uncover tremendous opportunities and business gains. “The 21st century has been christened the ‘age of data’. Data is increasingly acknowledged as the raw material of a new industrial revolution, and one of the key drivers of the information society,” said Joe Mucheru, Kenyan Cabinet Secretary in the Ministry of Information and Communications at the country’s annual ICT Week in May. “In this ‘Big Data age’, new types of science and engineering facilities and sensors are generating streams of digital data from telescopes, video cameras, traffic monitors, magnetic resonance imaging machines, and biological and chemical sensors monitoring the environment.” As of yet, you would be hard pressed to find an easy explanation for any of these ideas. Instead, you hear them as sound bites on social media, news stories, within content on start-up websites and debated by individuals at tech conferences - many of whom have yet to fully understand who needs big data, what kind, when and why. According to Higinio Maycotte founder and CEO of Umbel, the confusion is legitimate. Few fully understand what big data is, much less what the term’s offshoots entail. He suggested we should think of it as the human discovery of fire. But whether we comprehend the terms, implications or technology or not, moving forward on its import has become hugely essential. The simplest thing about big data is that it is actionable. “Big Data analytics tracks behaviour and gives you products and adverts tailored to you. This includes directing you to special offers that are more relevant to you,” said Terry Greer-King, Cisco director for cyber security in UK, Ireland and Africa. To harness these benefits, these massive quantities of data are crunched by an ever-increasing number of Silicon Valley servers that straddle the intersection between data, analytics and business. In the past few years, there has been a massive increase in companies that want to deal with Big Data and help organizations to understand the value of information. To succeed, they rely on infrastructure that can read and analyze smart data, identity data and people data. Besides, big data as a concept is defined around seven aspects: Volume, velocity, variety, variability, veracity, visualization, and value. In an interview with E-PAYMENT REVIEW, Ositadimma Ugwu, Principal Consultant (Cloud, Infrastructure & Bigdata) at Dell EMC offered insight into these aspects. Volume, he said, is how much data that is available. What used to be measured in gigabytes is now measured in yottabytes. Velocity refers to the speed at which that data is accessible, while variety describes one of the biggest challenges of big data. “You must have processing and analytical power to process it at the same speed that it comes,” he said. It can be unstructured and it can include so many different types of data from spreadsheets to video to Whatsapp chats. Organizing the data in a meaningful way is no simple task, especially when the data itself changes rapidly. Variability implies that the meaning of data is constantly changing and that can have a huge impact on data homogenization.

It is estimated that by the year 2020, we will have 6.1 billion smartphones globally. Our accumulated digital universe will increase from 4.4 trillion gigabytes to 44 trillion gigabytes.

“Big data has the capacity not just to read the data but to read it in the context and make analytical reasoning from the context from which it was made,” Ugwu said. Veracity, according to him is all about making sure the data is accurate, which requires processes to keep the bad data from accumulating in the systems. Visualization means using charts and graphs to visualize large amounts of complex data because it is much more effective in conveying meaning than spreadsheets and numbers and formulas. “The seventh V is value. After you have done all these there is need to derive value from what you have done,” he said. Clearly, there are a lot of moving parts and patterns emerge when these characteristics are looked at closely. Addressing value as the end game begins with smart data, which directly relates to data entry points being intelligent enough to make some types of decisions on incoming multiple data sets (offline data, spreadsheets, logs, social media, on-site metrics) immediately, without requiring processing power from a centralized system. It monitors data at the source, captures events that are exceptions, assesses them, makes a decision and shares the output -- all within a specific window of time consisting of seconds or fractions of a second. Here, we are talking about as-it-happens information enabling real-time decision-making. It could prove useful in situations where banks had to stay abreast of cyber-fraud or a logistics company wanted to know how a road diversion is affecting transport infrastructure so that they can react accordingly. Identity data, however, is the force behind predictive modeling and machine learning. It is

also the side of data that is most concerned with security. When a company’s data is breached, it is the loss of identity data that is usually the biggest issue. Card numbers associated with names and physical addresses, as well as email addresses, could be stolen by hackers. These data points are what constitutes identity data, and combined with an individual’s social media data, purchasing habits, on-site behaviour analytics. It tells the story of who you are in the digital age, including what you like, what you buy, your lifestyle choices and at what time or intervals all of this occurs. Sound scary? Sound like a privacy issue? The goal is to make the Internet less annoying and frustrating, and to seamlessly blend your online and offline lives. In the customer service realm on the Internet, people data enables companies to treat customers as actual humans by aggregating social data over-time. It is not a real-time system, because real-time here doesn’t really matter. What does matter is knowing who your audience likes and follows on social media, what links they click, how long they stay on the site that they clicked over to and how many converted versus bounced. It also helps to know how different users with different social media preferences act on your site, which ones have bought from you before, if they liked what they bought and if they use or relied on a review system to do so. Then, based on people data combined with on-site analytics, a site can customize experiences for users based on how those customers want to use a site. This reduces confusion, lowers the bounce rate and overall helps marketing teams understand how to treat their loyal customers. E-PAYMENT REVIEW June 2017

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Like other key technological developments that are driven by the Internet, Big Data is bringing change to the way businesses and societies are run. But how is it done? What infrastructure and systems play critical roles in meeting big data’s end-game? When you learn about Big Data you will sooner or later come across Hadoop. This odd sounding word is the name for a set of open source programmes and algorithms being used as the "backbone" of big data operations. Hadoop is a software framework for storing data and running applications on clusters of commodity hardware. It provides massive storage for any kind of data, enormous processing power and the ability to handle virtually limitless concurrent tasks or jobs. Created by Doug Cutting and Mike Cafarella, it was released in 2005 by the Apache Software Foundation, a non-profit organization that produces some of the open source software powering much of the Internet behind the scenes. Doug, who was working at Yahoo! at the time, named the project after his son's toy elephant. The boy was two at the time and just beginning to mumble words together. He called his beloved stuffed yellow elephant "Hadoop". Originally developed to support distribution for a search engine project, Hadoop’s value changed when software engineers realized that it would be useful to be able to store and analyze datasets far larger than can practically be stored and accessed on one physical storage device. This was partly because as physical storage devices became bigger it took longer for the component that reads the data from the disk to move to a specified segment. Instead, many smaller devices working in parallel would be more efficient than one large one. With Hadoop, data and application processing are protected against hardware failure. If a node goes down, jobs are automatically redirected to other nodes to make sure the distributed computing does not fail. Multiple copies of all data are stored automatically. With data volumes and varieties constantly increasing, especially from social media and the Internet of Things (IoT), Hadoop’s ability to store and process huge amounts of any kind of data has quickly become why it is a key consideration. Yet the question that remains for many industry stakeholders is: What is the current and future role of big data in the payments ecosystem? Actually in terms of payment, big data is one of the things that rides the hype cycle up and down, but it is getting to the point now where banks are looking seriously at using the information they have on their customers to deliver improved services and better operational efficiency. Payment providers offer a variety of services around cards, mobile money, corporate payments, cheques, and wire transfers. They have been sitting on these volumes of customer data for decades and have only now began waking up to the possibilities of monetizing it. And there are lots of possible applications that they would find fit for this purpose. Whether this is in defense (cut costs, optimize IT, defend against financial crimes or augment existing cyber security) or playing offense (signing up new customers, better cross sell and data monetization), strategies being driven by big data analytics has become a key capability. Using this capability, payment providers can now have a single view of a cardholder across multiple accounts and channels of usage. Doing this can enable cross 18

E-PAYMENT REVIEW June 2017

sell/upsell and better customer segmentation. An area of increasing interest is the application of sophisticated analytics by merchants especially to the understanding of exactly what the customer journey is. Retailers, airlines, hotels and other online merchants can now understand what segments their customers fall into as well as what the best avenues are to market to each of them. One company ustilizing big data to great effect is Amazon. The e-commerce giant generates 29% of sales through their recommendations engine which suggests popular products to specific customers. By analyzing 1,000,000,000 gigabytes of data from 200 million customer accounts hosted on more than 1,400,000 server, Jeff Bezos and

his team at Amazon are using big data analytics as a magic wand for snagging customer loyalty through personalized recommendations, price optimization, targeted marketing and more. The company's uses various tools in the cloud for data storage, data collection, data processing, data sharing and data collaboration. Its analytics platformbuilt on top of Hadoop framework catalogues data of about 1.5 billion products in the retail store, spread across 200 fulfilment centres across the globe and receives close to 50 million updates every week. The data is crunched every 30 minutes and sent back to various data warehouses as personalized recommendations to its customers. Big data analytics holds special significance for the growing mobile payments sector, where the success of mobile apps and wallets over traditional forms of payment requires a keen, multi-faceted understanding of customer behaviour. In order to drive adoption, mobile payments need to provide users with more than just cashless convenience, they must also offer added value that is relevant to both the individual person and the situation at hand. Big data promises to make that level of insight possible. It is dramatically changing the approach to detecting fraud in real time while building models based on historical data and deep learning to proactively identify risks. While financial fraudsters are becoming increasingly sophisticated and daring, big data is enabling banks to deploy real-time analytics on a massive scale to meet their growing threats. Payment providers can now assess the risk score of transactions in real-time depending upon various attributes that could include IP address. Its techniques are also being deployed to detect money laundering disguised as legitimate payments. What about financial inclusion? Ugwu believes that Big data can enhance efforts to bring a large swath of the unbanked population into the formal financial system. He wants the banks to look beyond the type of data that is easily accessed and interpreted by humans without the need for complex algorithms and work on synthesizing data collected directly from the holdouts themselves through sources like Google search terms, social media, business transactions and SMS. This will help them to build a better profile of the individuals who are outside the system and give a clear analysis of why they continue to hold out. That way, the banks can devise smarter strategies for targeting them. Unfortunatley, doing that sometimes highlights several risks that arise from the increased use of big data. The main one for consumers is privacy. Data on people’s personal information, interests, and activities may be collected and used for analysis without their knowledge. Sensitive personal data, such as health information, can be at risk of being revealed publicly. Consumers may be denied loans from other financial institutions if data on late payments is made public without further information on the circumstances that led to the late payments. Discrimination is another risk, as consumers with similar characteristics may be grouped together and excluded from accessing financial products and services. This type of profiling can lead to the wrong people being included or the right people being excluded. But with a vision to help the 2.5 billion unbanked men and women around the world access fair, flexible financial services, that might be worth the risk.

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COVER INTERVIEW

INSIDE THE MIND OF BIG DATA.

What is in Big Data? Ositadimma Ugwu breaks down how the architecture differs from data warehouses and how the technology can alter the nature of digital payments. BY BROWN N. UGBAJA 20

E-PAYMENT REVIEW June 2017

Ositadimma is a Principal Consultant for Cloud,Infrastructure & BigData at Dell EMC with responsibility providing technology advisory services to clients in varied sectors in Africa and Levant. He took out time to offer expert information on Big Data. First, let me hear your story of how you got into data science. What motivated you to work in data science? I began my career in FirstBank as a data administrator and from there I moved to the defunct Oceanic bank which was later acquired by Ecobank. I later joined Stanbic IBTC where I headed the infrastructure support unit. While there, I enrolled for a masters at the University of Liverpool with a focus on cloud, big data, computing and distributed systems. After I earned my masters, I made a conscious decision not to restrict myself to banking. I had spent 10 years of my life working in banking and I desired to see technology deployment from a non-financial services sector. I wanted to know what it like in areas like oil and gas, telecom and other sectors. Besides, at that time, banks did not embrace the concept of big data analytics. What they were doing was to implement data warehousing and business intelligence. These were not analytics and as much as they could offer insights, they dealt more with historical data, which uses trends to predict the future. I wanted to see the way Big Data was being deployed in other industries. I left for IBM where I was put in charge of driving that product line and eventually, I went into consulting, deployment of cloud related big data analytics in different sectors. I was fulfilled because I could map what I read to how it is been used and how it can drive value at the industrial level. I want to poke the ‘big data’ hype. It has been described as the next frontier for innovation, competition, and productivity. Is it all about the size of the data and its potential usefulness to the organization? What are major drivers of big data and analytics? Please give us interesting examples. For some years now, companies abroad have been deploying Big Data analytics as a way to mine information from what is called a data lake. It is a dataset that is so complex and so large that it cannot be handled by the traditional software management systems that we were in use before. Take banking, banks have different aspects and products that generate information like the ATM, cards, core banking and the rest of them. Data from these products reside in a database that is managed by systems like Oracle, MySQL, Sql, Cybase and the like. Information from this database can be obtained through a concept called relational database management system or online analytical processing management system (OLAP). Relational database management system is the operational database for the banks, for the telcos using systems Oracle and the rest of them. To obtain business intelligence, companies over here depended on OLAP to mine historical data. You put historical data of twenty years in one place and mine it to make business intelligence

sense out of it. That was the much most organizations in this side of the world could do. But Big Data goes beyond getting historical data from different sources, keeping it in one place and checking it at the end of the day to see how you can predict the future based on trend analysis. The sources of data to the big data may come from unstructured, semi-structured and structured. It comes from the entire digital footprint - email, SMS, social media, banking information, information you store in the cloud. The more you go online and click, data is generated from any of the systems or sources you visit. But that data is not structured data like in a relational database system where the data is structured and that is why relational database system cannot manage such information. Now apart from that, the data is so huge that you won’t be able to manage it with the same conventional systems that are deployed to read relational data. So we have to use a technology we call Hadoop which is developed to manage unstructured and store it in a distributed manner. What steps, best practices, and how-tos do you suggest for those seriously pondering over leveraging analytics for business gains? To make sense of it you have to utilize the seven Vs or seven views or characteristics of big data. One is the volume and here we are talking about too massive quantities of information that comes in Zettabytes and Petabytes, or trillions of gigabytes. Second is the velocity, which means the rate at which the data comes and the rate at which it has to be processed. Now if the data is generated from one hundred different sources, you will agree with me that the velocity at which it will come will be so fast that a relational database management system cannot handle.it. You must have processing and analytical power to process it at the same speed that it comes. Else, like the data warehouse, you will end up being reactive instead of predictive because as data warehouse only holds historic data, if there was fraud in a bank branch, nobody will know until the end of the day when the bank will take a backup from the relational database stored in a warehouse and analyze it using business intelligence tool. That means the only time they will know there was fraud in the morning. In a data lake, the veloc-

THE ADOPTION RATE OF BIG DATA HAS BEEN SLOW BECAUSE ORGANIZATIONS HAVE BEEN TRYING TO DO IT THEMSELVES.

ity of data coming in at a high speed is processed at that same high speed so you can see what is happening as it is taking place. You can predict based on behavioral patterns that the way things are going that there is likelihood of fraud and you can prevent the fraud from happening. In the former way you can only detect it after it has happened and you can’t prevent it. So you are being proactive instead of preventive. The third V is veracity and this talks about the reliability, the consistency, the trustworthiness of the data that is coming in. It means that if you are building a big data or a data lake or a data repository, you don’t just take data from anywhere, you should be able to justify and trust the data coming in. The fourth V is variety; this is attributable to the fact data is generated from different sources, that they are of different data types and they may be structured, semi-structured or unstructured. The fifth V is called variability, which is derived from variable. This has to do with how a particular data could mean different things. Same data, same source but could mean a different thing. In variability, the information is viewed in context and not at face level. Big Data has the capacity not just to read the data but to read it in context and make analytical reasoning from the context in which it was made and you can use it to find fight fraud and or make wise business decisions. The sixth V is talking about visualization. In the conventional data warehouse, to create business intelligence you must spool report, prepare it in excel and present to management. In big data analytics, you don’t use excel rather data is presented in forms of graphs and charts that would make more meaning to the type of people you are presenting it to. The Last is value. The point to doing all this is to derive value from data that is seemingly worthless. In essence, the value lies in rigorous analysis of accurate data, and the information and insights this provides. There is a lot of potentials and value from big data that could revolutionize the work done by telcos, banks, government agencies in charge of meteorology and aviation. Data science being in the nascent stage in Africa yet, what all challenges do you face today? What are some of the misunderstandings of big data, not just for companies, but for everyone? The misunderstanding really is the fact that some organizations have found it difficult to separate the big data from a data warehouse. Sometimes when we go for a presentation or to discuss big data, someone will tell us they already have something similar but when we probe further we discover that they were referring to a data warehouse. We make such people understand that data warehouse can only keep historical data that structure information in batches. There you see what happens in ATMs, in online banking, mobile banking. You can mine them to obtain business intelligence. Big data does not use historical data. There is a misunderstanding of the concept. Even some big organizations approach big data projects in the same way they approach relational database projects because they still see it from their own perspective. What about the government? What mistakes do they commonly make when implementing data science initiatives? E-PAYMENT REVIEW June 2017

This is a tricky one because the government didn’t show much enthusiasm when we pushed it to them initially but now we find that they are embracing it. The problem the government has is data ownership. We have approached several agencies of Nigerian government with plans to consolidate available data because currently available citizens’ information is in silos and in that way do not offer wholesome value. NIBSS has the BVN data, NIMC has identity records, telcos together and the NCC came together to capture our information. Everyone wants to have their own data. We have more than enough data scattered everywhere and until the government comes up with a consolidation policy that would lead to building a data repository and establishing the owner of the repository, data would still not be very viability in their decision making. Two, the government should make a law or policy to determine data ownership and how citizens’ data should be fed into to the central repository. When this is done we can see value in Big data for the government. Those keeping data in silos don’t understand the impact of data or even Big Data for government. Analyzing data in new ways can help government in planning social services, healthcare, education, transportation and housing. Government itself is very complex and big data has the potential and is possibly our best hope for solving our intractable problems. Why are these agencies unwilling to consolidate data? Does it mean they don’t understand the value of the data in their possession or is there a fear that such a consolidation might make the organization redundant? Yes, there is that fear of becoming redundant. Those agencies holding on to these data see it as means to remain relevant to the system but they do not know that redefining ownership of data and consolidating it could create more benefit than we have now. Take airtime borrowing for instance, telcos will only let you borrow airtime based on how much you have been recharging. So if you have been recharging N500 airtime you can’t borrow more than 500 and so on. In big data we have what we call a use case and telcos are now using it to create new borrowing models. One of the use cases will be instead of measuring your net worth based on how much you have been recharging, they would give you airtime based on your net worth. Your real net worth is what you earn in your financial data. You might be recharging N500 on your mobile but you earn over a million and you recharge that amount because you use your land line more. Which means you borrow than N10000 worth of credit but telcos cannot see this. They need to merge their own data with BVN data to be able to form a picture that shows this. BVN data has the information of the person who would want to borrow more credit and if the telcos could have such financial information they can afford to allow him or her borrow more because they can see she has the financial strength to pay it back. As it is now the database the telcos have can’t determine my net worth and the banks are not allowing them to access this data. In that case, what would be the ideal approach to deal with the problem of data models getting outdated quickly due to rapid changes in the underlying data? 22

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From an analyst's perspective, we need easier access to data and the capability to conveniently interpret, transform data into a more interactive and comparative model for our environment. The current way is very human and time intensive because it takes months or longer to get valuable information from historical data. Like the telcos, credit registries face the same problem of access to data. Any time you want to take a loan from the bank, there are three credit registries that the banks rely on verify your credit history. The bank is mandated to draw your profile from two of those registries to validate your credit history. The registries themselves get their data from the information that banks spool to them monthly. Now you can take a loan from one bank in a year, liquidate it early this month and go to another bank later that month to take another loan. That bank will go to the credit registry to spool your data and they would be told you are still owing the first bank but you no longer owe that bank. What happened is the bank has not spooled the latest data to the credit registries to show that you paid back the loan. With Big Data you don’t need these three registries running big infrastructures to spool data from banks; all they need is to plug into the BVN data which is online real time to get all the credit history of the person up to the latest transactions done. The problem is that even the banks want to own their own Big Data infrastructure instead of looking at adopting a shared services model that would be paid for by everyone who benefits from it. This is because there is a knowledge gap and current database administrators want to hold on to want they know and don’t want to test something new. Earlier you mentioned running data through Hadoop. What is it and what other systems or software, are useful for big data? Hadoop is a library framework that allows for the distributed processing of large data across wide collections of system using simple programming models. In Big Data, the software and the underlining technology are different because they are designed to handle large volumes of information on a daily basis. In a conventional database system, there is a server and storage that processing data in defined and rigid ways. For unstructured data, these databases lack the agility and scalability that is needed. Hadoop makes it possible to cheaply process and analyze both structured and unstructured data together, and to process data without defining the structure ahead of time. The framework for Hadoop solutions can come as an appliance. In Dell EMC, it is called a data link appliance and inside it is a high-speed dataanalysis system designed to take all kinds of data from multiple channels and process it to uncover

“IN BIG DATA, THE SOFTWARE AND THE UNDERLINING TECHNOLOGY ARE DIFFERENT BECAUSE THEY ARE DESIGNED TO HANDLE LARGE VOLUMES OF INFORMATION ON A DAILY BASIS.”

all kinds of insights. What is your opinion about adoption rate of Big Data Analytics amongst organizations in Nigeria and Africa? Are banks and payment services providers fully utilizing Big Data Analytics in their initiatives to boost customer experience? The adoption rate is slow; I must tell you. The telcos have embraced Big Data analytics concept faster than the financial institutions. Most of the banks are still using data warehouse and business intelligence even though they collect a lot of data from customers. By continuing to do that they are missing out on key things like sentiment analysis. This particular feature is key in understanding customer experience. Imagine you went to a bank and the customer service staff was rude to you. You go to your Facebook page detail the experience or threaten to close your account with the bank. Your Facebook friends weigh in with stories of similar experience and comments on the thread start to build up. Now you have passed a message with others confirming that bank has a bad customer service. Until the bank has big data or data lake or streams of data coming from Facebook, it will never know what is going on online about its customer service. It then will require big data analytics to do sentiment analysis to understand why people are closing their accounts or not opening new ones. Customer service is so important and telcos take it more seriously than banks; that is why they do not joke with big data. They have a lot of customers and they understand that if they fail, their customers can easily port to another network. They use it to deter fraud too and have used it to help security agencies in fighting the scourge of kidnapping. The police now rely on telcos to get the data of kidnappers as they communicate with their victims’ families. But they have also been reactive because the police don’t get that data until the next day and the police are supposed to get this information as it happens through their own online real time system. Big Data adoption needs to be improved on both the side of the government and the private sector. With the growing level of insecurity, has become essential for the government to finance big data projects so the DSS, police and the different agencies fighting crime can have a dash board in their respective offices to monitor crime online and real time. The banks and telcos can then plug into the central data system for information that require. What of small businesses that are usually behind the curve on everything? Is this in their purview? What are some of the things that they can do to take advantage of big data? SMEs are reading about it and are excited about the opportunities it holds. E-commerce businesses like Konga have since embraced it because they know the value. They embraced cloud computing because it allows them to operate their business and offer a service without owning expensive infrastructure. Small business owners have to be made aware of such models. They need to know that they can consume a software as a service or an infrastructure as a service. Why will a small startup buy an enterprise license meant for 400 people and don’t ever get to use it? The concept of cloud computing allows them to have access to the application without having to install it. They

can consume it as a service online, which mean paying as they use. That way the can benefit from big data analysis while riding on infrastructures provided by others. Do you think banks will lose out to new entrants if they do not start using their customer data to offer specialized services, rewards, bigger real-time loans? There is a reaL possibility of that happening but there are some regulatory requirements that will prevent it happening. Fintech companies stand the chance of doing things differently from the way banks operate and that could win them customers especially the disgruntled ones. In the interim, fintech companies need to come together to work on big data projects that would help them understand the customer and not make unnecessary assumptions. It will help them to be in the forefront of some of the things that the banks are taking for granted. Big Data will help fintech to maximize data based on their specific business workflow, they will know what customers are expecting and they can access all the available information at the right time. This means they can predict customer behaviour and improve their service before they encounter a complaint. If there are complaints, they can spool the type of information they want to use to measure customer sentiment and also see how they can get in touch with persons angry with their service. On this, banks need to collaborate and share data with fintechs. How can you use big data analytics or large and complex datasets to predict future cus-

tomer behaviours and trends and use the outcomes to advance financial inclusion? We are trying to woo people into the financial system but we donâ&#x20AC;&#x2122;t know who these people are, what appeals to them, their earning power, where they live, their level of education, how the love to spend. We just assume that because they donâ&#x20AC;&#x2122;t have a bank account they may not be working high end jobs. People have different reasons for not having a bank account. In some ways, they want different things. As such the way the bank targets them should be different in each individual case. The approach you will use to target a lecturer would be different from what you would use to woo the like of my mother who sells at Idumota and only uses her phone to answer calls. That is why banks must get the demography right. There is one key mistake they keep making when it comes to data categorization. For instance, when they target undergraduates, they tend to approach them as one category. But there are student and there are students. They should be able to define and go beyond the category of student by creating sub-categories that could be based on their spending abilities, the possessions they bring to school and even down to the type of phones the use. That way the bank would be able to do personalization of services. That can only be possible when you determine the different categories based on chosen preference. Based on predictive analysis they can create different adverts that they can see online. That way you are being predictive based on the behavioral pattern of the individual and you treat them as single entity. Many companies have a difficult time finding

the right experts to expand their digital competencies. How should organizations go about finding the big data skills they need? The adoption rate of Big Data has been slow because organizations have been trying to do it themselves. When the telcos adopted it, they allowed us to provide them the engineers that work for them in-house. We call it insourcing and I think it is the model that organizations should adopt because it allows those proficient in big data analytics to lead the cause. However, you donâ&#x20AC;&#x2122;t really need to be an IT person to be able to consume this service. But you need to have the ability to understand the principles of experimental testing; be competent in the interpretation and use of numeric data; able to see the big data picture to be able to work in big data analytics. Security and privacy are big issues when it comes to Big Data, can you describe some of the measures to ensure data is used ethically? We have heard the argument about the potential impact Big Data could have on the privacy and security of individuals. There is concern that the massive data and the results that can be derived with Big Data, could lead to detailed insights into the locations, specific interests and behaviour of the subjects being analyzed. Some people would perceive this as a breach of their privacy. Underlying any Big Data programme, a data governance structure is established that provides clear directions at to how the data is to be handled and protected by the organization. There are also compliance requirements from regulatory bodies that protect the privacy of individuals and the security of their information. E-PAYMENT REVIEW June 2017

Interview

Using budget analysis for advocacy Oluseun Onigbinde, founder and team leader of Budgit, on how analysing government’s budget is a powerful tool and how following the money reveals government's priorities

BY LUCY AKOKOTU

LIFE.GUARDIAN.NG

What was your motivation for starting BudgIT and why is what you are doing considered important? It began when I worked with a public sector team in First Bank. Before then I always asked myself what I can do differently. I used to communicate with my colleagues in the bank, explaining to them about public sector analysis, contracts and new leads for clients. So, I thought to myself that the citizens also deserve to be enlightened on how public resources are disbursed and spent. Out of curiosity to try something new, I started BudgIT. My motivation was to let Nigerians have access to information on public spending. Inequality in terms of information is the reason public officials steal public resources and why there is a lot of waste in the public sector. The key driver of this project is to ensure the citizens have equal access to public finance and how to take action on the basis of that. Nigeria will only thrive when information is available to the masses. What was your background prior to creating BudgIT? How did people around you react when you first started? We were lucky to have come at a time everything was going right within the ecosystem. We were a group of young people who wanted to change the face of technology in Nigeria. When Bosun Tijani and Femi Longe created the first social innovation lab called Co-Creation Hub, we were the first group of people admitted to that space and also the first set to graduate. The existence of an incubation space where you can actually be grounded how to handle social entrepreneurship, manage finance and reputation; steer the integrity of data was very important. My family - my late dad, and 24

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my mum - were very supportive as they believed this was something that was very important to the society. Also, the space where we wanted to engage was enthusiastic because they saw that there was a need for someone to push argument on the basis of facts. That’s what we have always done in BudgIT. What you do is to make government budgets and spending transparent and easy for everyone to understand? What have you learnt about the budgeting process in Nigeria that people would be surprised to know? One thing I have learnt is that there is so much waste and abuse of public finance. What I found in the budgetary process is that the political class takes care of itself first before thinking about the citizenry. Public officials and politicians claim to spend billions of naira every year on projects but evidence shows that the projects of four years ago are still uncompleted. There was a time we had over 6,000 abandoned projects in the budget. I agree that the new administration is putting more funds in capital expenditure but the transparency of that is still not as adequate as you would expect it to be. That is the reason more Nigerians need to ask questions and be more selfaware about what is happening. Your work involves gathering and interpreting budget data in order to make comparisons and recommendation on an issue or decision. How do you access the necessary public records? What challenges do you face and how do you handle them? The most challenging thing is not just data but data that comes in useable form because for us in Nigeria, transparency is a buzz word that politicians throw around. We always ask ourselves four questions when we want to talk about transparency in BudgIT. Is it comprehensive? Is it useable? Is it timely and is it accurate? These are the tunnels this data pass through because we want to maintain our integrity. A lot of times the data that comes to us is not useable. A governor will present a budget and set capital expenditure at 100 billion naira or include road construction at the cost of 50billion naira in a certain local government. The question is what kind of road would require that amount in a local government area? So for us, transparent, detailed, comprehensive, useable, accurate and timely data is not available. It has become a battle for those who feel society deserves to know and be educated about the budget and those who feel that information must be kept in a very secretive manner. They don’t want people to ask questions on how public resources are spent because as you know, public resources are used to fund campaigns or to serve private interests. All of these things are what make data difficult to get. It is not that the

"WHAT I FOUND IN THE BUDGETARY PROCESS IS THAT THE POLITICAL CLASS TAKES CARE OF ITSELF FIRST BEFORE THINKING ABOUT THE CITIZENRY"

data is not there; it is available but nobody is willing to put out how they spent public funds. Until Nigerians become more aware that they have to ceaselessly demand accountability, there’s no way we can actually move forward. Your organization says that it applies technology to intersect citizen engagement with institutional improvement. Can you discuss how open data technologies can be useful, useable, and used? I believe that if we as a country can understand the trends of the time, we will come to see data as a very key aspect. We say we want to diversify but without data, you can’t do much, you can’t properly plan the use of your resources. Look at the education system, what is the pass rate for public schools as against private schools? Who is insured and who is not insured? What is the mortality rate of health institutions? All this is data. With all of that, you can build layers of businesses, solutions and opportunities. What we have here in Nigeria is not detailed. When we have a proper explosion of data in health, agriculture, finance, education, governance and security, people will be able to connect the dots and build up all sorts of applications. Look at BudgIT, just because the budget data was open to a point, not even completely open, we were able to create an organization where over thirty people work, over sixteen tracking offices in states like Lagos, Abuja and Sierra Leone. We were able to get investors such as Bill and Melinda Gates, Omidyar Network to invest in BudgIT because we focus on some aspects of the country’s budget. Imagine what will happen when we expand that to a different service. The challenge is that when raw material is not available, there’s never the opportunity to build on top of it. I think that’s something that we need to step up and change. What potentials do technology and big data hold in your ability to scale the impacts of your projects? What kinds of opportunity does technology present to BudgIT? What is your view on big data analysis and do you use it in your work? In Nigeria, our data systems are not sophisticated to the scale that can be called big data. Big data involves data layered in a size that is unquantifiable and to pick up insights and intelligence from it, one needs to apply certain techniques. In Nigeria, what we have are pockets of data. For instance, imagine the data that resides with NIBSS from switching, cards and other forms of payments then layer it down with BVN, that is big data. But is that data available to the public? One important example is in the area of identity management. We can build a single user identity system in Nigeria and not the different forms like the BVN, NIMC voters card, census, passport and others that we have right now. Your passport, drivers’ license, voters’ card can all be connected and from this, we can build intelligence and be able to apply big data analytics. With the quality of data that we have available now we have not scratched the surface of it. The essence of big data is to build valuable insight and that’s what we are doing in BudgIT. We take open data from the budget and build valuable insights from it. Do you think that policymakers and politicians are sufficiently interested in putting

give to every audience is pertinent. At the grassroots we don’t talk about transparency, accountability, salaries, power and capital expenditure because they won’t, connect with it but when you tell them there is a provision for a borehole in their area and that they need to hold accountable the person responsible for it to make sure that the borehole is done, then there’s a sense of awareness that comes to them. That is why when you are talking about data, it has to be very contextual. We try to build an incentive structure around our data; what we know will interest people. How do we engage them? For policy makers, we address them through policy documents and partnership but when it is the grassroots we engage them directly on the project. What else do you do to track activities and connect with people in those local areas? We built a new tool called tracker that allows people to collaborate and track public projects. Over 80 public projects have been built through that method where we engage people to write a letter, take action either through their senators, representatives or even the executive arm and demand that projects in their community be completed. Our engagement is stronger at the grassroots and we are excited about it. We want to work and push it more at the grassroots level. We know we can’t do it alone. There are other organizations that do the same thing but we don’t view them as competition. We want to go on a broader scale, use television and radio to drive engagement for people to use our tracker to track projects How do you make money? Do you offer premium content through your site? First, we want what we do to be sustainable; to make sure that fifteen or even fifty years from now we are still here, doing impactful work. We just want to do our work because that is why we exist. International organizations like the Bill and Melinda Gates Foundation, Omidyar Network foundation, Civil Society of West Africa have been gracious to support our work. We have the services unit that builds infographics for organizations, a for-profit that is strictly for services and non-profit that also gets the work done. How do people get access to your service? We have a radio programme on Niger FM and presence in sixteen states where we track public projects. We work in six communities per state. We also do analysis for public institutions. We are on radio, television, and social media raising awareness about our work. their trust in the findings generated by predictive models and data mining tools? Are you seeing it being discussed anywhere in a way that demonstrates an understanding that this is a solution that we can use to the benefit of the budgetary process? When it comes to the budget, everybody has a different thing they are looking at. Public officers are looking at their salaries; citizens looking at the capital infrastructure, contractors are looking for possible contracts that are going to emanate from it; so everybody is looking at it from a different angle. In BudgIT, we develop policy documents for high-level public officers and we try to bring it down in a simple way on social media. It just

Oluseun Onigbinde is the co-founder of Budgit, a stratup that examines how money is allocated to operationalize government strategy and policy.

depends on the class of people we are trying to engage. Our work has been phenomenal. On the 2016 budget, we compiled a list of almost 400 items that we found were suspicious and frivolous and sent it to the National Assembly. Lawmakers are considering those findings in their analysis of the 2016 budget. What we have we pass to the government because we believe there has to be a constant interrogation of the numbers in the budget. How we choose what to

What excites you most right now and what do you see next for Fintech? Do you believe the hype about Blockchain and Artificial Intelligence? Fintech for me is still new, still emerging and there’s so much opportunity. A lot of things are coming up and even with the many organizations that we have now, we are still not scratching the surface. But I believe that something huge is coming from that space. For blockchain technology, it’s here to stay because it’s robust and can be filtered into every segment of the society. Those of us in the government space are also watching the blockchain and artificial technology space because we understand that these emerging technologies are going to define the future. E-PAYMENT REVIEW June 2017

INSIGHT

Where the industry shares strategies for combatting payment fraud.

Real security implications of virtual currency Why Nigerians need education before jumping on the virtual currency bandwagon

BY ADEFEMI ONANUGA

NEFF / AFRICABUSINESS

oney remains the ultimate store of value, means of exchange and the barometer for measuring wealth since the gold standard era ended. Money is simply an agreement to use an object e.g. paper, coins, and notes as a means of exchange. In recent times, due to technological advancement, we find ourselves in a hyper-connected digital world where convenience is a key determinant for engaging in business and payment for goods and services. This advancement led to the evolution of other means of exchange and the emergence of the subject matter. In 2014, the European Banking Authority defined virtual currency as "a digital representation of value that is neither issued by a centra! bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal peisons as a means of payment and can be transferred, stored or traded electronically". The European Central Bank described it as "a type of unregulated, digital money which is issued and usually controlled by its developers, and used and accepted amongthe members of a particular virtual community." The most comprehensive definition yet was given by the Financial Action Task Force "Virtual currency is a digital representation of value that can be digitally traded and functions as (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value, but does not have legal tenderstatus (i.e., whentenderedto a creditor, is a valid and legal offer of payment) in any jurisdiction". Virtual currency is not alien to us. It would be interesting to note that technically we have been using virtual currencies since we started Internet banking. Virtual currencies are fully digitized currencies (i e. an intangible legal tender and that are stored on a network) and are a type of digital currency implying that every virtual currency is digital. It is common for the terms to be used interchangeably although, they convey different things. The evolution of virtual currencies began in the year 2009, with the likes of Egold and later more advanced cryptocurrencies like Bitcoin, Namecom, Peercoin, Auroracoin, and Ethiereum emerged private PCs around the world, which keep up and upgrade an open record called the “blockchain.” (Consumer

E-PAYMENT REVIEW June 2017

Deputy Governor, Operations at the CBN, Adebayo Adelabu (4th from right) flanked by other dignitaries at the unveiling of the Nigeria Electronic Fraud Forum Annual Report for 2016 in Abuja.

L-R: Director, Consumer Protection Department at the Central Bank of Nigeria (CBN), Hajiya Umma Dutse; Chairman of NeFF, Dipo Fatokun at the the NEFF stakeholders’ workshop on cybercrime.

Financial Protection Bureau, 2014). Virtual currencies have distinct advantages over banks - it is an open source, continuously available, stable, and secured by its clients rather than the government. In the course of recent years, virtual currencies have been associated with immense investment losses and illicit online trafficking of black market goods leading to government crackdowns. For comparison, the value of virtual currencies as of January 2014 was estimated at $13 billion while the value of U.S. bills and coins in circulation, reached approximately $1.2 trillion. In 2012, a Washington Post article named three companies that employed full-time economists to manage their virtual currencies.

Virtual currencies offer the potential for business convenience and innovation. However, a lot of critical risk issues primarily affecting users call for concern. There is a need to implement consumer protection, anti-fraud and anti-money laundering measures and data protection. In the same vein, there are compliance implications of the use of virtual currencies and the effects on storage and backup affecting IT governance risk and compliance functions.There are also implications for storage and backup of the use of virtual currencies which can be stored online or offline. In practice, users are saving an encrypted file, which can be on a USB or external hard disk or smartphones or the cloud. The main issue here is the security of the currency being stored, How

secure is it? Who can gain access to it? And how can the movement be tracked?. In practice, the Confidentiality and Integrity of the stored currency cannot be guaranteed. In 2011, a security breach was experienced by Bitcoin which led to the compromise of hundreds of accounts and

Consequently, a shortterm project was initiated with the following objectives: oo Develop a riskmatrix forvirtual currencies. oo Promote fuller understanding of the parties involved in convertible virtual currency systems and the way virtual currency can be used to

L-R: President of ISSAN, David Isiavwe, Onajite Regha CEO of E-PPAN, Babatunde Chukwuma Ajiboye at the the NEFF stakeholders’ workshop on cybercrime.

Briefing Billions lost to cyber crime in 2016 Electronic payment transaction fraud rose by 82 percent in 2016 with an estimated N2.19 billion lost to cyber criminals, according to the Nigeria Electronic Fraud Forum (NeFF) annual report 2016. Reported fraud cases for banks reached 19,531 in 2016 as against 10,743 recorded in 2015. When broken down the report showed that across the counter transactions amounted to N511.07m of losses. This was followed by Automated Teller Machine transaction with N464.5m, internet banking N320.66m, Point-of-Sale transaction N243.32m. A further breakdown also showed that mobile banking saw N235.1m fraud, eCommerce N132.2m, web N190.9m, kiosk N10.1m, cheque N4.5m and N190.9m through other platforms not categorized. On the aggregate, digital payment systems saw higher levels of fraud at 77% against 23% fraud for non-electronic platforms. The report said the industry was able to salvage 49.7 percent of the total amount attempted by these fraudsters within the years adding that the figures indicated that there are more attempts on yearly basis with different tricks or modus operandi deployed to game the system.

Building stronger legal framework against Cybercrime

Dignitaries at the NeFF Stakeholders Workshop on Cybercrime with the theme: Tackling Enforcement Challenges Under the Cybercrime Act.

theft of approximately $500,000 worth of virtual money. Since then, the confidence of the general public in the security has been in doubt. The 2013, New Payment Products and Services (NPPS) Guidance (FATF, 2013) suggested a conceptual framework for understanding and addressing the anti-money laundering / countering the financing of terrorism (AML/CFT) risks associated with one kind of internet- based payment system: virtual currencies. Two narratives emerged: oo Virtual currencies are the wave of the future for payment systems; and oo Virtual currencies provide a powerful new tool for criminals, terrorist financiers, and other sanctions evaders, to move and store illicit funds out of the reach of law enforcement and other authorities.

operate payment systems oo Stimulate a discussion on implementing risk-based AML/CFT regulations in this area. In the nearest future, we might see other forms of virtual currency, possibly, one that converts personal and social data into online currency. It is important for participants in the payment eco¬system to raise awareness on the subject matter to match the rate of growth in virtual currencies. Adefemi Onanuga is the chief information security officer for Jaiz Bank. He is a certified auditor and implementer of various management standards. Culled from NeFF 2015 annual report.

The Nigeria Electronic Fraud Forum (NeFF) recently held a stakeholders workshop on cybercrime to review the impact of the cybercrime act in light of new technological developments like the growing interest in cryptocurrencies, blockchain and fintech. The event attended by regulators, bankers, telecoms operators, lawyers, cyber security experts, law enforcement agencies among others reviewed the Cybercrime Act and the challenges around its enforcement. CBN Governor, Godwin Emefiele (represented by Adebayo Adelabu, CBN's Deputy Governor, Operations), who spoke on the theme of the workshop said the challenges around enforcement have made it imperative for a review of the law. “The clear implication of these developments is that, as there does not seem to be any alternative to the wholesome adoption of technology by the financial services industry; there should be no option to taking the critical steps needed to ensure that the technology and processes adopted remain safe, secure and functional at all times. " Emefiele said. The workshop made recommendations for the effective implementation of the law to reduce fraud and boost consumer confidence in the payment system. E-PAYMENT REVIEW June 2017

The Risk Report 6,000,000 Africa gets Internet infrastructure CYBERCRIME

Number of jobs in cybersecurity left unfilled globally with the greatest shortage in security personnel occurring in Africa and Southeast Asia, according to the World Bank.

People dont trust robots to do banking RESEARCH FROM HSBC has found that people would rather put their faith in a robot to perform open-heart surgery than trust one to open a savings account or provide mortgage advice. Its study, which surveyed more than 12,000 consumers in 11 countries, indicated that a rising tide of technophobia is stalling mainstream adoption of digital services. The bank said a lack of understanding and trust in technology is leading millions of consumers to shun new advances in banking services, such as fingerprint recognition, voice recognition and robo-advice. So, it plans to introduce over 3000 'Digital Champions' by the end of 2017, to tutor and encourage front-life staff to have positive conversations with customers about the benefits of digital banking services.

security guidelines

THE INTERNET SOCIETY AND THE AFRIcan Union (AU) have unveiled a new set of Internet Infrastructure security guidelines that will help Africa create a more secure Internet infrastructure as well as change how AU members states approach cyber security preparedness. The guidelines were developed by a multistakeholder group of African and global Internet infrastructure security experts, and are the first step towards building a more secure Internet in Africa. They will help AU member states strengthen the security of their local Internet infrastructure through actions at a regional, national, ISP/operator and organizational level. “Africa has achieved major strides in developing its internet Infrastructure in the past decade. However, the Internet won’t provide the aspired benefits unless we can trust it," said Dawit Bekele, Africa Regional Bureau Director for the Internet

Society. "We have seen from recent experiences that Africa is not immune from cyber-attacks and other security threats. These guidelines put in place the necessary measures to increase the security of their Internet infrastructure.” Africa’s cyber security environment faces a unique combination of challenges, including a lack of awareness of the risks involved in using technology, underinvestment, talent shortage and overload of data. As Internet penetration grows in Africa and more business takes place online, implementing security measures to protect Internet users will become increasingly important. Offering actions that are tailored to the African cyber security environment and solutions for an ever changing online landscape, the recommendations in the document launched can help Africa respond to Internet attacks.

QUANTUM LEAP A collaboration of the Oxford University, Bay Photonics and Nokia created this prototype gadget for transmitting quantum keys that encrypt information passed from a mobile device to a payment terminal. Quantum technology uses millions of single particles of light to send encryption keys and the protocol can detect unusual activities such as eavesdropping, and can shut down the communication to prevent hacking. If used in a mobile device, the gadget could significantly improve the security of cashpoint withdrawals, and prevent skimming attacks.

BIOMETRICS

Coming soon: Walking style password THE WAY YOU WALK could one day be the "fingerprint" that unlocks your phone. A small wearable protoype developed at the Australian Commonwealth Scientific and Industrial Research Organisation not only uses the kinetic energy created as you walk to generate power, but also turns users gait into a form of biometric authentication. The device monitors the pattern of power generation caused by the gait's kinetic energy. As the movement creates small dips and troughs in the amount of energy being generated, the device is able to resolve it into a unique signature. The device can also provide backup power for mobile devices using kinetic energy harvesting. "By applying both techniques we have developed a way to achieve two goals at once -- powering devices and the ability to verify a person's identity using a wearable device by capturing the energy generated from the way they walk," said Data61 researcher Sara Khalifa. The team tested the device on 20 people on a variety of terrains including outdoor on grass and asphalt terrains and it was able to authenticate based on gait with 95 percent accuracy and reduced energy consumption by 78 percent compared to accelerometerbased gait authentication, a method that is easier to achieve.

These gadgets can hack passive keyless entry systems to steal cars

BLOOMBERG / WIRED

Researchers at Qihoo 360 Technology - a Chinese internet security company - have successfully put together this relay hacking system that can allow burglars to unlock a car and steal its contents or maybe even the car itself. The device cost just $22. The attack essentially tricks both the car and real key into thinking they’re in close proximity. To open the car, one car thief carries one device and tails the car owner, while thief with the second device stays with the car. Once the first thief gets near the car owner’s key, his device ‘copies’ the fob’s signal, then transmits the copied signal to the other device, which then transmits it to the keyless entry system. The bad news is that the keyless systems equipped in these cars come from a Dutch company called NXP that builds the system for a lot of new cars today, including some by Volkswagen and Ford. Hopefully, NXP can address the situation before car thievery becomes the norm.. 28

E-PAYMENT REVIEW June 2017

AUTHENTICATION

SA develops next-gen digital ID technology SCIENTISTS AT THE UNIVERsity of Johannesburg's aiThenticate Computervision Labs have developed digital identification technology to fight identity theft. The technology, dubbed aiDX, uses proprietary algorithms that simulate human cognition to confirm or determine the identity of a person on any smartphone or device equipped with a camera. “The human brain simply operates at a much deeper, far more advanced level than what is possible with conventional authentication methods," said André L Immelman, CEO of aiThenticate Computervision Labs. "Extensive field tests have shown that, as the next generation authentication technology, aiDX eclipses, and in fact, surpasses the overall performance of conventional authentication methods by a factor of some 20x on average.”

Numbers

$48.2 billion

Amount that merchants across eight major industry segments are expected to lose this year and a lot of that can be attributed to spikes in fraud.

200+ million

Number of financial services records breached in 2016, representing a 937% increase over the previous year, according to data from IBM's X-Force Research which revealed that the financial services industry was attacked more than any other industry in 2016.

3D ADEPT / KITGURU

44%

Percentage of global Internet users who make their information public according to Kaspersky Lab. One in five admitted to sharing sensitive information with strangers, limiting their control over how theinformation may be used.

THREAT LEVEL Fireball Adware Infects PCs

SECURITY EXPERTS HAVE discovered a massive malware outbreak that has already infected more than 250 million devices across the world. Dubbed Fireball, the malware, is an adware package that takes complete control of victim's web browsers and turns them into zombies, allowing attackers to spy on victim's web traffic and steal their data. Check Point researchers, who discovered this massive malware campaign, linked the operation to Rafotech, a Chinese company which claims to offer digital marketing and game apps to 300 million customers.

Android phones vulnerable to attack Researchers at Georgia Institute of Technology have discovered a new attack, dubbed 'Cloak and Dagger', that works against all versions of Android. Cloak and Dagger attack allows hackers to silently take full control of your device and steal private data, including keystrokes, chats, device PIN, online account passwords, OTP passcode, and contacts. The attack doesn't exploit any vulnerability in Android ecosystem; instead, it abuses a pair of legitimate app permissions that is being widely used in popular applications to access certain features on an Android device.

Chrome flaw

A bug in Google's popular web browser Chrome could enable bad actors to place a malicious file onto a target PC that could then be used to siphon off Windows credentials and initiate a Server Message Block relay attack Researcher Bosko Stankovic of DefenseCode found that with its default configuration, Chrome browser will automatically download files that it deems safe without prompting the user for a download location but instead using the preset one. This step, he explained, is not optimal from a security standpoint, but to cause any harm a user would still need to manually open and run the file.

SWITCH BETWEEN PRIVACY OPTIONS ONLINE Even people who consider themselves to be in the know about tech can get flummoxed when it comes to the subject of online privacy. That’s something a nifty piece of hardware created by Spanish designers Roman Torre and Angeles Angulo hopes to address. What they’ve developed is a 3D-printed prototype of a desktop device, called Thero, that allows users to switch between encrypted communication methods simply by turning a dial. ENCRYPTION

Banks struggle with verifying online banking customers THE VERIFICATION OF USERS' IDENtity should be central to the cybersecurity strategies of financial institutions but a new survey from Kaspersky Lab has found that a quarter of banks worldwide struggle with the identification of their customers when delivering digital banking services. The latest Financial Institutions Security Risks survey showed more than half of banks ( 59 per cent) anticipate growing financial losses in the next three years due to fraud. With the rise of online and mobile banking, customers are not only becoming victims of financial fraud, but also a major entry point for attacks on banks’ digital channels. The survey found that in 2016, 30 per cent of banks had security incidents that affected banking services delivered via the Internet — with phishing against customers, and using customer credentials for fraudulent activities, topping factors that led to the attacks. Banks find themselves in need of security technologies that do not undermine

the customer experience: 38 per cent of the organisations surveyed confirm that balancing prevention techniques and customer convenience is one of their specific concerns. “While thinking of different approaches to secure digital and mobile channels, banks naturally avoid putting too much pressure on customers. Online banking should preserve its main benefits: as a convenient way of making financial transactions in seconds. That is why we are working on technologies that help to protect both banks and their customers without adding an extra security routine to the user’s experience,” said Alexander Ermakovich, Head of Fraud Prevention at Kaspersky Lab. In addition to two-factor authentication and other security procedures used by banks, Kaspersky Lab recommends implementing dedicated solutions that can help to identify whether a person is authorised, without requiring additional actions from the user.

Neutralize internet threats before they hit your network ASUS HAS CRAMMED SOME IMPRESSIVE SPECS INTO the ROG Rapture GT-AC5300, and its promise of ‘fast, easy, stable’ performance will surely appeal to many network administrators because it can broadcast Wi-Fi to all corners of even the largest house or office. It has RangeBoost, a powerful range-enhancing combination of hardware and software that increases coverage while also significantly improving long-range throughput It is fortified with frontline security capability to defend users network. It features a state-of-the-art intrusion prevention system powered by Trend Micro technology which protects your network from external attacks and threats, neutralizing them before they can reach your network or devices. It has a killer feature called VPN Fusion, which lets you run a VPN and an ordinary internet connection simultaneously. E-PAYMENT REVIEW June 2017

Next Up IN BRIEF

BIOLOGY

Mind-controlled glove teaches stroke patients to move again

Saltwater electric

Researchers at Penn State University in US have developed hybrid technology that’s capable of producing “unprecedented” amounts of electrical power at the point at which seawater and freshwater converge at the coast. Its creators claim the smart tech could generate enough energy to fill 40 percent of the world’s electricity demands.

Tech for the departed

If you could hold a natural, face-to-face conversation with someone who has passed away, would you? If you answered yes, then we have good news: technology has arrived that may soon have you holding that eternal debate. It’s called New Dimensions in Testimony and it was created by the USC Shoah Foundation, the institute started by Steven Spielberg to help combat hate and violence.

KICKSTARTER / EVAPTAINERS / NIMBLE

Most Funded Smartwatch

The hybrid smartwatch ZeTime from Swiss wearables brand MyKronoz has raised over $3 million on Kickstarter. A first-of-its-kind timepiece that combines mechanical hands over a full round colour touchscreen, it is not only one of the Top 50 most-funded projects ever on Kickstarter and the second most-funded wearable campaign, but the first and most-funded hybrid smartwatch in crowdfunding history. 30

INTELLIGENT SMART HOME ASSISTANT Momo is a smart home robot designed by the Morpheos Team Based in California as a standalone security system integrated into a stylish lamp. It is packed with features like motion/ intelligent sound detection and facial recognition. It can sync with and manage nearly all smart home devices and learn user habits and environmental preferences.

SCIENTISTS AT the Washington University School of Medicine in St. Louis developed a wearable robotic glove called the Ipsihand that makes use of brain signals to help stroke patients restore the use of their hands. The process involves a glove or brace that fits over the hand, a non-invasive electroencepahalography cap (or cap fitted with electrodes that detect the electrical signals of brain activity) and a computer that amplifies those signals. In a healthy person, a split second before the left hemisphere of the brain becomes active to move the right arm, the right hemisphere shoots off electrical signals, indicating the intent to move. It's these intention signals that

scientists harness with the Ipsihand system. "The idea is that if you can couple those motor signals that are associated with moving the same-sided limb with the actual movements of the hand, new connections will be made in your brain that allow the uninjured areas of your brain to take over control of the paralyzed hand," said Eric Leuthardt, co-senior author of the report. To make these new connections, Ipsihand's cap detects the intention signals to open or close the hand, then the computer amplifies them. The brace then opens or closes in a pincerlike grip with the hand inside, bending the fingers and thumb to meet.

IMPACT / ELECTRICITY-FREE FRIDGE TO

HELP REDUCE THE WORLD’S FOOD SPOILAGE

A STARTUP CALLED EVAPTAINERS HAS CREATED A KIND OF REFRIGErator that requires no electricity, runs instead on six litres of water to work and keeps food cold and fresh for 12 hours. It’s reportedly able to hold 60 litres of produce. The system makes use of PhaseTek, a technology becomes activated when a user fills the internal reservoir with cold water. The walls of the device then begin to draw out heat from the interior of the device through evaporative cooling. Some 1.4 billion people lack access to electricity worldwide today, most in rural areas across Southeast Asia, China, India, South America and Sub-Saharan Africa. 40 percent of agricultural produce in these area spoils before it reaches the consumer, according to the Food and Agriculture Organization. The Evaptainer can help to combat this proble. Still in its prototype phase but the expected price is $10 to $20.

E-PAYMENT REVIEW June 2017

CYBERNETICS

Dragonflies engineered into drones THE HOWARD HUGHES MEDICAL INstitute and Draper, an R&D firm, are working on DragonflEye, a project to turn nature’s most versatile winged creatures into mini drones. It involves fitting dragonflies with tiny backpacks containing navigation systems that tap directly into their nervous systems to control flight patterns. Dragonflies can fly upward, downward, forward, backward, side to side, hover and sustain bursts of 30 mph. They can also fly thousands of miles over land and water and

reach altitudes of nearly four miles, making them ideal test subjects. Genes similar to those found in the eyes of dragonflies are inserted by researchers, making their steering neurons light sensitive. The backpacks emit pulses of light that correspond to the desired movements. What is the purpose of these experiments? Some researchers propose remotecontrolled insects for surveillance, while others think they can help sniff out explosives and aid in search and rescue missions.

FARMING HIGH-TECH Bowery which calls itself "the modern farming company" has created a modern farming style to meet the challenges of the future while growing the purest produce possible. Located in a warehouse on the shores of the Hackensack River in Kearny, New Jersey, farmers are growing 100 times more food than they could on a similar size plot of land in an agrarian landscape. One of the big efficiencies of Bowery's indoor farming approach is this multilevel growing environment - crops are grown vertically using hydroponic methods and LED lighting.

World's largest floating solar power plant CHINA HAS BUILT the largest floating solar power planet on earth in a series of moves designed to make the nation less reliant on fossil fuels. Located in the city of Huainan in the Anhui province, the 40-megawatt facility was created by PV inverter manufacturer Sungrow Power Supply Co. Ironically, the floating grid itself was constructed over a flooded former coalmining region. This transition to solar is in large part due to the rapidly plummeting cost of the technology itself.

MIT MEDIA LAB / THEINERTIA / CNET /FORD / JUICERO / WITHINGS

MIT Scientists invent clothes that breathe MIT RESEARCHERS have invented a material that can breathe using biological cells. The project, called bioLogic, is essentially a breathable workout suit covered in small flaps. The flaps are “lined with live microbial cells that shrink and expand in response to changes in humidity” allowing the entire outfit to act as a reactive sensor to let athletes cool off as needed. The material uses a nonpathogenic strain of E. coli that could swell and shrink in humidity and even fluoresce when you sweat, glowing green as you exert yourself.

INTERNET OF 'USELESS' THINGS

JUICER WILDLY OVERENGINEERED

VIEW FROM THE MARKETPLACE

Catching the waves of greatly increase wireless capacity for 5G networks WE ARE NOW IN THE EARLY STAGES OF THE next technological revolution: the development of a ubiquitous wireless network that will marry data collection and computation with billions of devices. This will provide us with unprecedented insights and abilities that will change what we do and how we do it. This network is called 5G. Outside of a few tech-focused circles, the benefits of 5G aren’t widely understood. Reduced to its most elementary definition, 5G may sound a lot like its predecessors — a set of invisible radio waves that transmit information between devices, just faster. Replete with a host of alphanumeric acronyms, it’s going to radically upend many aspects of our lives, just like 4G LTE and 3G before it. Unlike its predecessors though, 5G is a technological paradigm shift, akin to the shift from typewriter to computer. And it isn’t just a network. 5G will become the underlying fabric of an entire ecosystem of fully connected intelligent sensors and devices, capable of overhauling economic and business policies, and further blurring geographical and cultural borders. It will be capable of delivering at every rung of the ecosystem’s ladder, and will provide seamless, continuous connectivity for business applications.

All industries will feel the effects of the shift to 5G. In particular, automotive, health care, and the Internet of Things (IoT) are expected to bring about dramatic transformations in our daily lives. For example, think about the relationship between the smart city and an autonomous car. With a 5G connection, your car will know your ETA at work, taking the optimal route based on traffic data communicated from other cars and the roadways. While a handful of companies are working on this level of automation, the ability to deliver this type of functionality at scale will require the marriage of intelligent devices and the 5G network. This unprecedented innovation will create a different economy. After examining 21 unique 5G use cases, such as enhanced indoor wireless broadband coverage, augmented reality and virtual reality, asset tracking, and autonomous vehicles, IHS Markit found that 5G has the potential to unlock up to $12.3 trillion of revenue across a broad range of industries. To put this in perspective, that revenue figure is nearly equivalent to total U.S. consumer spending in 2016, and more than the combined spending of China, Japan, France, Germany, and the U.K. This revenue also represents about 4.6 percent of all global real output in 2035.

Gear / Ford's baby crib feels like a car CAR BRAND FORD HAS CREATED A SMART CRIB THAT AIMS TO soothe babies to sleep by gently rocking and lighting up, to simulate a car journey. The Max Motor Dreams cot was developed for parents who often use a night-time drive to soothe their baby till they drift off to sleep. While it appears to be a normal crib, the Max Motor Dreams simulates the motion, engine noise and even the street lighting of a night time journey. A speaker in the bed plays engine sounds, its base rocks gently to mimic movement and the sides are lined with softly blinking LED lights designed to look like street lamps.

IF EVER PROOF WERE needed that not everything is improved by connecting a device to the internet, the Juicero (a fruit and vegetable juicing machine) is it. At US$400, the Juicero produces a glass of juice from a US$8 pack containing pre-mashed fruit and vegetables. It became the laughingstock of the tech industry in April after Bloomberg revealed that the packs could be squeezed into glass by hand. Meaning that the machine itself is a completely unecessary part to the process. The makers responded that being connected to the internet is what makes the machine essential to the production of juice because it can be remotely instructed to remind customers to drink juice before their juice packs expire.

INSIGHTS FROM BRUSH NOISE

FRENCH HEALTH TECHnology firm Withings partnered cosmetics company L’Oreal to create the Hair Coach – a Bluetooth and mobile app-equipped hair brush – that educates its users in how to brush hair correctly without causing any damage. The brush features a microphone that listens to the sound of your hairbrushing and sensors to detect patterns, which feeds into a smartphone app for healthier hair.

E-PAYMENT REVIEW June 2017

Fraud Report Industry Fraud Report, First Quarter 2017 DMB Q1 2017 Fraud Summary

tive efforts in the fight against mobile fraud, yet more efforts are required.

MOBILE -- 146, VALUE -- N12.4 MILLION

FRAUD VOLUME Although, the total count of reported fraud for the 4th quarter is 5304, the industry recorded 2898 losses (completely or partial) in fraud volume. The industry was only able to save 45% of the attempted fraud attempt within the quarter. The fraud volume recorded in this quarter shows that the fraudsters are not relenting on their effort. The volume almost equates the 4th quarter volume which has been found to be usually the highest in that regard. The industry needs to gear up for this renewed vigour from the fraudsters.

5.304 Fraud Volume

2,898 Actual loss Count Volume

5022

Corporate Accounts

Q1 2017 Vs Q4 2016 Comparison

Q1 2017 Vs Q1 2016 Comparison

decrease

N764 million

59% increase

ATTEMPTED FRAUD Q1 2017 Vs Q4 2016 Q1 2017 Vs Q1 2016 Comparison Comparison

21% 25%

decrease

N376 million

Individual Accounts

decrease

ACTUAL LOSS VALUE Q1 2017 Vs Q4 2016 Q1 2017 Vs Q1 2016 Comparison Comparison

14% 38%

decrease

Despite the increased fraud volume, the industry was able to reduce the actual loss when compared to Q1 and Q4 of 2016. However, with N37GM loss in the 1st quarter of G017, all hands must be on deck to ensure that we keep the activity of the fraudsters at an arms length.

51%

The industry was able to save 51% of the attempted fraud value. FRAUD BY CHANNEL

ATM -- 2,690, VALUE -- N144 MILLION

ATM Represented 50% of the total fraud volume and 38% of the actual loss value for Q1 2017. ATM decreased by 5% when compared to last quarter in volume. The volume and actual loss value increased significantly when compared to Q1 2016. Stricter controls and more effective measures will assist to a great extent in curbing this menace.

MOBILE -- 1,149, VALUE -- N89.1 MILLION

Mobile fraud is on a steady increase .The constant rate at which customers compromise their details, Sim swap manipulation and the relatively easy way for the transfer of money via the mobile device has made the channel highly susceptible to fraud. Mobile fraud increased in both value and volume for this quarter as against Q1 and Q4 2016. However, this quarter experienced massive collabora32

E-PAYMENT REVIEW June 2017

POS fraud is gradually declining. The volume and actual loss value for this quarter decreased when compared to that of Q1 and Q4 2016. However, fraudsters are known to change activities on channels .This should not be overlooked as POS is still one of the most convenient avenue for dissipating fraudulent proceeds.

INTERNET BANKING -- 180, VALUE -- N25.6 MILLION

Internet banking saw a fall in both value and volume for this quarter when measured with last quarter. This can be connected to shift in mobile fraud as fraudsters find that channel more easier to exploit. Internet banking represents 6.8% of the total loss for this quarter.

WEB -- 672, VALUE -- N23.1 MILLION

Web for this quarter decreased as against last quarter of 2016. The channel represents 12.696 of the fraud volume for this quarter. Trends before now had indicated fraudsterâ&#x20AC;&#x2122;s growing interest in this channel. The reduction in fraud via this channel should still hold much cause for concern, as this channel is still highly viable for fraudstersâ&#x20AC;&#x2122; activities.

CHEQUE -- 2, VALUE -- N252, 000

The usage of cheques and fraud in relation to it has drastically declined over a period of time. Seeing an increase in both volume and value when compared to last quarter should not be overlooked.

ECOMMERCE -- 105, VALUE -- N5.8 MILLION

First quarter of 2017 sees a decrease in eCommerce in both value and volume when compared to the preceding quarter. eCommerce just like the web channel, is still instrumental for fraudulent activities, despite its decline in this quarter.

ACROSS COUNTER -- 60, VALUE -- N34.2 MILLION

Comparing this quarter with Q1 and Q4 2016, Across the counter decreased for this quarter in both volume and value. The channel represents 9.196 of the total loss value for the quarter.

Summary

All channels need to be well monitored, as fraudsters will constantly change tactics to achieve their aims. However, the channel summary above shows that ATM and Mobile are more utilized for scheme. Both channels represent 7296 of the entire fraud volume and 6296 of the actual loss value for this quarter. ATM and Mobile had become the most vulnerable channels that is easily exploited by these fraudsters. The financial industry needs to take drastic measures in curbing the activities of fraud on these channels.

FRAUD BY DAY MONDAY -- 944, VALUE -- N72 MILLION

When compared to the 4th quarter of 2016, Monday of this quarter had a significant increase in volume (500 - 944) but a decrease in value (106M - 72M)

TUESDAY -- 882, VALUE -- N53 MILLION

Tuesday followed suit; with an overall decrease in value and an increase in volume.

WEDNESDAY -- 975, VALUE -- N86.3 MILLION

Wednesday recorded the highest value and volume for this quarter.

THURSDAY -- 972, VALUE -- N67.4 MILLION

Thursday had the second highest volume for this quarter, which also surpassed the count of 477 recorded in the preceding quarter.

FRIDAY -- 865, VALUE -- N65.9 MILLION

Friday was higher in both value and volume this quarter than the previous quar-

ter, which recorded N39m and 468 respectively.

SATURDAY -- 354, VALUE -- N14.4 MILLION

Saturday showed reductions in its recorded value and volume, which was pegged at N36M and 357 for the fourth quarter of 2016.

SUNDAY -- 312, VALUE -- N17.6 MILLION

Sunday increased in volume but decreased in value for 1st quarter 2017 when compared to the last quarter that recorded a count of 300 and value of N20Mm

OFIs Q1 2017 Fraud Summary

INTERNET BANKING -- 7, VALUE -- N7 MILLION

Surprisingly, internet banking channel witnessed an upsurge when compared with Q4 2016. This increase may not be unconnected with the usual social engineering tactics used on gullible account holders. The OFIs also need to find more effective measures to curb this menace.

WEB -- 73, VALUE -- N8 MILLION

FRAUD VOLUME The total count of reported fraud for OFI this quarter is 263 with only less than 296 being the volume completely salvaged. Although, there was a great deal in the decline of fraud volume when compared with that of Q1 and Q4 2016, but ironically, there was an increase in fraud values when also compared with Q1 and Q4 2016. It is quite evident that more collective effort is still being required for all players in the e-payment space in order to have substantial decline in fraud volume and value

With NGN 8M lost through this channel representing 1496 of the total actual loss and being the second most used channel to perpetrate fraud within the quarter, there was still a reduction of about 6196 in actual loss and 6796 in fraud volume when compared to Q4 last year. This can be related to increased collaboration amongst stakeholders

FRAUD BY DAY MONDAY -- 41, VALUE -- N4.2 MILLION

Fraud Volume

Individual Accounts

Monday recorded a lower volume and actual loss this quarter (Q1, 2017) than the last quarter (Q4, 2016).

Corporate Accounts

260

Q1 2017 Vs Q4 2016 Comparison

Q1 2017 Vs Q1 2016 Comparison

Tuesday was higher in actual loss value but lower in volume for Q1, 2017 vs. Q4, 2016. This is the day with second highest actual loss value for the quarter

263

Actual loss Count

N58 million

255

being the highest in both fraud volume and value, represents 5996 of the total loss value. There is an increase of about 18596 in actual loss when compared with Q4 2016. There is an urgent need for the Industry to reÂŹevaluate its current strategies and policies. Continuous customer awareness is also necessary to minimize the rate of social engineering being witnessed these days.

36% 14% decrease

ATTEMPTED FRAUD Q1 2017 Vs Q4 2016 Q1 2017 Vs Q1 2016 Comparison Comparison

38% 41%

increase

N56 million

decrease

increase

ACTUAL LOSS VALUE Q1 2017 Vs Q4 2016 Q1 2017 Vs Q1 2016 Comparison Comparison

37% 37%

decrease

As mentioned above, despite the decline in fraud volume this quarter, the industry witnessed increase in fraud values (actual loss and attempted) for OFIs when compared with Q1 and Q4 2016. Also, just about N2M was salvaged out of the reported N5BM attempt.

The industry was able to save about 3% of the attempted fraud value. FRAUD BY CHANNEL

ATM -- 40, VALUE -- N5 MILLION

This quarter, ATM channel witnessed a decline in both fraud volume and actual loss when compared with that of Q4 2016. This channel recorded about NGN5M actual loss with fraud volume of 40 which is about 1596 of the entire fraud volume for the quarter.

MOBILE -- 139, VALUE -- N33 MILLION

There is no dispute that Mobile is the new way. This paradigm shift indeed brought its consequences - increase in mobile fraud, which is definitely analogous to several products and services riding on this channel. With about NGN33M lost through mobile channel fraud within the quarter, the channel

TUESDAY -- 48, VALUE -- N13.3 MILLION

WEDNESDAY -- 49, VALUE -- N19.5 MILLION

Wednesday recorded the highest actual loss value and second highest fraud volume for this quarter.

THURSDAY -- 52, VALUE -- N11.8 MILLION

Thursdays recorded an increase of about 1 44% in actual loss when compared with the 4th quarter ÂŁ016. There was also an increase in fraud volume.

FRIDAY -- 34, VALUE -- N3.8 MILLION

Friday was lower in both value and volume this quarter than last quarter.

SATURDAY -- 22, VALUE -- N1.5 MILLION

Saturday witnessed a drastic decrease in both value and volume for the quarter.

SUNDAY -- 17, VALUE -- N2.1 MILLION

Sunday had a decrease of 53.5% in value and 73.8% in volume when compared with the 4th quarter 2016.

FRAUD INTEREST INDEX [FII] Fraud Interest Index is a mathematical fraud model that shows the channels with best RDI for fraudsters. The greater the RQI, the higher the probability of investing in the business. "ATM and Mobile emerged again as channels with greatest interests for fraudsters. Banks need to be vigilant on these channels. Mobile is very high risk".

BVN WATCHLIST REPORT The industry only sends 4796 of the reported fraudulent BVN for watchlisting within the quarter. We encourage all Financial Institutions to ensure fraudulent BVNs are sent for watchlisting.

Courtesy of Nigeria Inter-Bank Settlement System Plc (NIBSS). E-PAYMENT REVIEW June 2017

Leading Women

There is no instruction manual on balancing work and career Yinka Akinwole, Konga's senior product manager shares her experience of gender diversity in the workplace, her progression into a leadership role and her infectious energy BY LUCY AKOKOTU New ecommerce platforms are springing up every day, what is Konga doing to cement its position in the industry and standout from the crowd? I agree there are online companies springing up but at Konga, we see them as challenging us to do better. To stay ahead of the pack, we do a lot of research and development. The result is in the way we push beyond the boundary of ecommerce by building a payment system like KongaPay and deploying an emerging technology to ease user experiences called Konga Easy. The latter helps our customers browse through our app with less bandwidth but still see more content. Aside that, our goal is not just to improve our offerings but to add value to our ecosystem and provide a good experience for both the merchant and the customer. E-commerce is undoubtedly one of the most exciting and rapidly developing sectors and it is vital that companies continue to innovate to boost business and consumer demand. How is Konga taking the lead in reshaping the retail industry with its various activities over the past year? At Konga we are always reinventing our products. We ensure that we bring up new features that help meet the demands of our customers. We recently launched Konga Daily which is our grocery line. Now you can shop for groceries on Konga and even have a pre-list whereby you don’t need to keep clicking on those items every month. We know what you want and we sort of build products specific for your needs. With this in mind, we also integrated major bill payment services on KongaPay such as televi34

E-PAYMENT REVIEW June 2017

sion and internet subscriptions and in the coming months, we are looking to add more. This is just to enhance the experience of our customers. At the end of the day, the goal is constant innovation. We work to always bring something new onboard and that has helped us in this space. There is a general concern among online shoppers that when they pre-pay for a product that they would get the exact goods they saw online and paid for. They also worry about the willingness of the ecommerce companies to quickly refund the customers in the event they are not satisfied with the product, which there is widespread preference for pay on delivery. What needs to be done to make customers to trust online commerce companies? Trust has been a major issue for ecommerce in Nigeria and in Africa as a whole. User who pre-pay want to be sure that what they would receive are of good quality. Putting card and bank details on online payment platform is also another trust issue. Merchants selling to someone who used pay on delivery also have their concerns. What if this person returns the item? What if my items get lost in transit during the return? What we have done at

Konga is to constantly work closely with financial institutions and other stakeholders to ensure that we have a reliable and safe platform. We give instant refund to customers once they complain about the product. We also have quick turnaround time when issues are raised. Aside this, I believe that with time when there is market confidence, people will start embracing prepaid options and we will start to build the trust from there. Some months ago, a delivery man for an online store was murdered by people who purportedly ordered products from the company. Are there plans to stop pay on delivery because of the dangers highlighted by such an incident? If there are, do you think it will reduce the appeal of online commerce? It is indeed unfortunate that we had that experience in the ecommerce industry. However we can’t say we will stop cash on delivery because right now Nigeria is still a cash-dominant market. However, providing solutions that will enable the customer to trust the platform is key. We intend to intensify our effort in making people aware of the benefits they stand to get when they use the prepaid option. At Konga, there is full protection

WHEN WORKING TOGETHER WITH A TEAM, YOU LET THEM KNOW THIS IS THE VISION AND THIS IS WHERE WE ARE GOING TO. ONCE YOU MAKE EVERYONE FEEL IMPORTANT, THEY PUT IN THEIR BEST.

and discounts for customers who pre-pay. We also train our delivery team on how on how to be safe. As a woman who has attained a leadership position, what do you consider as the driving force behind your success in the industry? For me, it is a passion for excellence. Whatever I do, I always want to be the best at it. I also have a very good team and I have worked with several good minds who have been very supportive. My family has also helped and that has been my drive. I’m thankful to God that even under intense pressure the support of these people helps me in finding the best answers. There is a belief that women cannot successfully strike a balance between work and family life without one getting shortchanged. How do you think that women can reconcile the demands of challenging work roles with raising a family? I will tell you that it is not easy and there is no instruction manual to balancing work and career. The way I see it is wherever you are, just be willing to give it a shot. For me it is like playing a role in a movie. If you are in the office, do your best and if you are home, do your best. Put your best in anything that you do. It has been argued that such issues as old-fashioned biases, prejudices, stereotypes, discrimination and lack of team support are what women sometimes encounter in the workplace. Have you experienced any of it and how did you handle the situation? I always hear there are gender biases in the work place but to the

best of my knowledge, I havenâ&#x20AC;&#x2122;t experienced any in my career. In terms of lack of support from team members, I ensure that everyone feels that they are a part of the team. This is done by motivation and persuasion. At the end of the day, what is the end goal? When working together with a team, you let them know this is the vision and this is where we are going to. Once you make everyone feel important, they put in their best. Once the attitude changes, they no longer think that it has to be a man that should lead. In the workplace, people are beginning to assess your value based on what knowledge you bring to the table and not your gender. What do you think is the most significant barrier to female leadership and how do we get more women into senior roles? I think the major barrier is a lack of self-belief and a willingness to maintain the status quo. I would advise women to be their best in whatever they do. Believe in yourself and have a passion for whatever you do. What advice would you give to women professionals who aspire to be leaders in their field? Do what you enjoy doing and see yourself rising. I always tell people, if you are not rising, look for somewhere else where you will be more appreciated and have confidence in yourself to deliver valuable results. What impact do you see revolutionary technologies such as automated virtual reality, IOT and voice-activated personal assistant having in the retail industry? These technologies are good and it is important that we evolve to point of using them to add value. However, we have to measure the value from where we are coming from. We must not adopt every technology just for adopting sake. Adoption has to be based on what best suits our business model. Here at Konga, we have adopted the technology that we find valuable to the current needs of the business. An example is machine learning, which we currently in detecting and countering fraud. We look for the opportunity to provide for our customers the best tailored solutions that meet their everyday needs. We try to automate our processes in a way that we can serve those customers who donâ&#x20AC;&#x2122;t like to repeat the same procedures all the time. We believe in emerging technologies but we have to leave room for their adoption. E-PAYMENT REVIEW June 2017

Roundtable Impact of disruptive technology on digital payment As innovations are enabling a wave of fintech upstarts, Roundtable looks at how new technologies could change traditional business models and lives

DIGITAL ENCODE / PAYSTACK

What comes to mind, when you hear disruptive technology? OLAOLUWA: This is a technology that basically changes the modus operandi in any industry. This technology creates a new market and value network. OLUWASEUN: It is about a change in the order of things with new thinking, new products and new business models. We are entering a new age of significant technological disruption with opportunities to make peopleâ&#x20AC;&#x2122;s lives easier through new and improved value propositions. Understanding how to transform, innovate and re-orient your business is the key to unlocking the opportunities this disruption is sure to bring. Off the bat, the current top trends for disruptive technology are omni-channel sales, artificial intelligence, Internet of Things, focused IT services, data security, data science monetisation, digital currency and online exchanges. OLUSEYI: Disruptive technology is simply one that displaces an established technology and basically creates a completely new industry or a new market. A prime example of a disruptive technology company is Uber. The dawn is breaking on a new era in financial services as we have a surge in technology startups that are disrupting the payment industry. What impact will they have in shaping the future of digital payments? OLUWASEUN: Before these startups, there were problems that plagued payments - financial inclusion, low literacy levels, slow infrastructure development, and low levels of security and trust in the analogue payment systems. These start-ups are changing the way everybody interacts with money. As they continue to double down and change the order of things in the payments space, merchant acceptance will be the most efficient way to drive inclusion and adoption. Consumers will trust digital payments as dispute resolution becomes easier than it was with cash payments and greater collabo36

E-PAYMENT REVIEW June 2017

RESPONDENTS Oluseyi Akindeinde Co-founder and Chief Technical Officer at Digital Encode Olaoluwa Oloruntoba Head, Fraud Operations at Interswitch Group Oluwaseun Runsewe Business Lead at Paystack

'Most banks are still trying to navigate and understand the blockchain concept in these parts.' --Oluseyi Akindeinde ration with traditional financial institutions will help them scale to their customer base. Also there will be regulatory support to allow fintechs provide value-added services, and finally, more innovation will evolve to providing solutions across sectors and business models. OLUSEYI: The impact will be really profound. There are already established financial technology companies (fintechs) that are leveraging the power of technology or

the smartphone to disrupt the otherwise existing financial services ecosystem. OLAOLUWA: Let me start by stating the fact that several fintech firms are rapidly growing from start-ups to multi-million dollar (or multi-billion naira) companies. Huge investments are flowing into fintech and the companies are all benefitting. We are seeing increased disruption in digital payment because of government regulations

that have empowered entities that are not typically within the financial services system to offer financial services on channels that were previously considered redundant. Also, the ubiquitousness of the mobile phone transformed the way and how payments are made. With mobile, there is almost no limit to the kind of payment solutions that can be created today. Fintechs have also given us digital currencies and according to recent studies into payments, consumers' use of digital payments will increase in the near future. The appeal is technology that is designed to make life easier while being easy to use. The future of payment with disruptive technologies is one of multi-channel, multi-service payment options, faster, seamless and efficient settlement mechanisms. There is still huge confusion among regulators everywhere as they grapple with defining the security attached to bitcoin - a product of blockchain technology. Looking at technologies that allow end systems to operate in a decentralised way with no intermediaries, how would banks adopt these technologies to add value to their customers? OLUSEYI: To be honest, most banks are still trying to navigate and understand the blockchain concept in these parts. Itâ&#x20AC;&#x2122;s new and most financial institutions are yet to come to terms with it. It is important to realize that blockchain and bitcoin are completely different

concepts even though they are related. Bitcoin is the first application of the blockchain technology. Blockchain is analogous to the Internet and bitcoin is analogous to email. Without the Internet (blockchain) you have no email (bitcoin), yet the Internet (blockchain) has no value without a use case (bitcoin). In effect just as the Internet is much more than email (there’s web, voice, video etc) the blockchain is much more than bitcoin. Infant bitcoin is the first application or use case of the blockchain technology. OLUWASEUN: Banks are exploring blockchain technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. Most banks are exploring the use of blockchain technology to streamline processes and cut costs. Further, they are leveraging it for additional advantages, including increased competitiveness with fintechs and other banks, and the ability to create new business models. Blockchain is predestined to disrupt financial services and will bring new developments to the space. Despite the win-win situation fintech adoption will pose for the banks, there is a need for thorough understanding of blockchain technology by the regulators to help set a regulatory framework around it. To this end, regulators can work alongside banks to run pilot tests, especially in cross-border payment and trade finance. For example, BBVA, Spain's second largest lender, has executed its first cross-border payments and has transferred about 50 euro-denominated payments to Mexico from Spain in seconds. Such transactions normally take up to four days to clear at much higher transaction costs. These partnership can only create more exciting customer experiences. Finally I'd advise that the banks collaborate and contribute to the development of standards -- from the protocol to an understanding of the regulatory and legal implications of blockchain - define the right use cases, and prepare for the future impact on business models. OLAOLUWA: Banks and financial services regulators need to accept that bitcoin is here to stay. It is the one currency that at the moment is not being regulated by any government. The driving force behind it is blockchain technology. There is already some fear in the banking sector about blockchain being a disruptive threat to the institution of banking. Rather than operate

from the point of fear and wariness, banks should consider adopting the many values of blockchain for facilitating banking and payments. Regulators on their own part, can control or monitor endpoints where blockchain leads to good service. One reason blockchain technology seems to be making waves in the payments space is that it

has the potential to eliminate data fraud. Is this a solution to securing everyday transactions? OLUSEYI: Absolutely. It is the only transparent electronic ledger secured by the collective mining power of distributed systems called network nodes. It uses mathematics and cryptography to protect anything of value. Every single transaction is verifiable and traceable to its origin. No fraud can effectively take place because the system in itself is not centralized. It is a decentralised, distributed ledger that uses a consensus mechanism (called proof of work) to validate all transactions. It is pretty good and time-tested. OLAOLUWA: According to Investopedia, blockchain is seen as the main technological innovation of Bitcoin, since it stands as proof of all the transactions on the network. A block is the ‘current’ part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. There is a countless number of such blocks in the blockchain. So

are the blocks randomly placed in a blockchain? No, they are linked to each other (like a chain) in proper

we cannot say it is the solution to securing transactions. The blockchain technology is still growing

'As startups change things in the payments space, merchant acceptance will drive inclusion and adoption.' --Oluwaseun Runsewe

linear, chronological order with every block containing a hash of the previous block. To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Blocks, meanwhile, are like individual bank statements. I will not agree with the notion that blockchain will eliminate data fraud. The problem with the current data management is identity theft, data tampering and denial of service and these breaches happen because data is centralized. What blockchain has done is to protect identities, the identity of individuals are tied to a ledger in a tamper-proof hash and this makes it quite difficult for the identity of an individual to be forged. All transactions are digitally signed and evidence of this is distributed across the many blockchain nodes. If there is a tampering of data, everyone in the blockchain would know about this; the blockchain promotes data transparency and integrity. Definitely, a system that discourages data breaches or decentralizes data is very good, but

and vulnerabilities on the technology are still being researched. OLUWASEUN: Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. Using blockchain could have large implications for fraud prevention overall. Case in point, bank ledgers create a centralized database that is more susceptible to hackers. In contrast, blockchain is decentralized. However, blockchain doesn’t eliminate all types of fraud. In fact, there have been several large-scale bitcoin thefts, even with blockchain in place. In addition, while blockchain may reduce certain types of fraud, thieves may simply double their attacks elsewhere putting other payment channels at risk. Companies are still in the early stages of determining how blockchain can improve transactions, whether that means fraud prevention or simply increasing speed. Regardless of whether the technology is implemented or not, it is important to consider how new payment methods can open up risk vectors. E-PAYMENT REVIEW June 2017

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State of Payments ACTIVATING A THEME PARK This device called Tapu Tapu devices are designed for use at an all-new water theme park built by Universal in Florida for everything from reserving a place in a virtual queue to activating special effects throughout the park. Users can assign credit cards to their accounts that tie to their park tickets. Other features include reserving time to experience attractions and the ability to trigger interactive elements placed throughout the park. Guests are expected to return their TapuTapu wearables to the park at day’s end.

CRYPTOCURRENCY

UNIVERSAL / FC SCHALKE 04

Even The World's Largest Exchange Couldn't Handle Bitcoin's Wild Ride BACK IN FEBRUARY WHEN ONE bitcoin was worth $994, the owner of an eponymously named boutique advisory firm in Montreal, Canada forecast that the cryptocurrency would hit $25,000 over the next 10 or 15 years - a figure that is both outlandish and mindboggling, and was met with more than just a dollop of skepticism and derision. However, as the digital currency has surged a breathtaking 400% over the past year, currency managers are taking him more seriously. Today, a single bitcoin is now roughly twice as valuable as an ounce of gold. The price of the currency has gone up 50 per cent, due to massive surges in demand that even caused Coinbase, the world’s most funded bitcoin exchange, to crash. One bitcoin was worth $2,800 on May 25, up from $1,200 at the end of April. The big question is why the market suddenly got so optimistic about bitcoin’s future. One factor appears to be Japanese retailers and investors, who are piling in after the government there announced in April that bitcoin will become legal tender. Besides, there has been steady growth of international money-transfer services that use bitcoin

to move cash from country to country. In countries that accept it, you can buy groceries and clothes just as you would with the local currency. Only bitcoin is entirely digital; no one is carrying actual bitcoins around in their pocket. It is divorced from governments and central banks. It is organized through a network known as a blockchain, which is basically an online ledger that keeps a secure record of each transaction all in one place. Its users predict 94% of all bitcoins will have been released by 2024. As the total number creeps toward the 21 million mark, many suspect the profits miners once made creating new blocks will become so low they'll become negligible. But with more bitcoins in circulation, people also expect transaction fees to rise, possibly making up the difference. Search trend data showed inquiries on bitcoin and "ethereum" leaped in May to their most in at least five years. By region, Nigeria, Ghana and Estonia showed the most interest, while Switzerland, Singapore and the Netherlands topped the list for ethereum searches, according to Google Trends.

POS MARKET INDEX A shift in customer preferences, rising adoption of mobile devices and increasing number of e-commerce transactions are set to fuel global POS terminals market growth.

$98.27 billion

Projected value of the global Point-of-Sale (POS) terminals market by 2022, growing at a CAGR of around 13.5% between 2017 and 2022, according to Zion Market Research.

32.84%

Analysts forecast of the the growth prospects of the global mPoS terminals market during the period 2017-2021.

$9.6

SMART CLOTHING

Schalke unveils jersey with payment chip

GERMAN FOOTBALL club Schalke have unveiled a jersey with an embedded payment chip, becoming the first club to embrace smart clothing. To be worn by fans from next season, the logo will contain a chip that will allow supporters to pay for items within the stadium and receive discounts for doing so. In case you're wondering, the players of the Bundesliga club will not have the payment chip in their jerseys for games because in the words of Schalke's communications head Anja Kleine-Wilde, "they rarely go to kiosks at halftime to quickly get a curry-sausage or a beer."

billion

Value of the software components segment the mPOS market at a CAGR of higher than 22.1% by end of the forecast timeline. E-PAYMENT REVIEW June 2017

State of Payment In Short

PAYMENT INDEX

$5.5 trillion

Foot in door / Chinese internet titan Alibaba has struck a deal to let its global AliPay customers buy things in the US through First Data, makers of the Clover point-ofsale system. The partnership is explicitly aimed at creating convenience for AliPay's 450 million existing global users visiting the US.

Value of the Chinese mobile payment market, which tripled in value last year. By contrast, the value of mobile payments in the U.S. was about $112 billion in 2016.

3.4 billion

Smartphones that will be compatible with Apple Pay, Samsung Pay and Android Pay by the end of 2017 — with the number expected to increase to 5.3bn by 2021.

7.5 million

Retail workers at risk of replacement by robots over the next 10 years, according to a new study by Cornerstone Capital Group. The change will likely start with cashiers.

62%

Millennials who would like to use a fingerprint or retina scan to make payments, research released by Visa reveals. 61% already use their smartphone to pay for everyday items,” the payment network added.

SLIM WALLET The Fuze Card made by tech startup BrillianT can store up to 30 other cards - gift, loyalty, credit, debit, and every little micro-chip carrying piece of plastic - on its integrated encrypted chip. A small E-Paper screen indicates which card is selected and it can be used like a regular card on any device supporting magstripe, EMV, NFC, and barcode cards. Information is transfered through a card reader and an iOS/Android app on a Bluetooth-paired smartphone. On the app, users can add and delete stored cards as needed (they can also remotely delete them all if the Fuze is lost), track the location of the card, plus the app will notify them if they wander off without the Fuze. RESEARCH

Middle East, Africa are world’s fastest growing payment cards region THE MIDDLE EAST AND AFRICA (MEA) is the payment cards region growing the quickest across the globe as the number of cards in the hands of consumers in the region increased by 13% to 611 million in 2015, according to Retail Banking Research (RBR) in its Global Payment Cards Data and Forecasts to 2021. Large unbanked populations mean that many people do not yet have a payment card, and indicate significant potential. RBR forecasts that the number of cards in the region will rise to 910 million by the end of 2021. By far the largest payment cards market in the region is Iran, where all payment cards are domestic-only, as a result of the imposition of international sanctions. The RBR study shows that domestic schemes are also present in Israel, Morocco, Nigeria and

Saudi Arabia. Domestic scheme cards are sometimes favoured because of their lower issuing costs - in Morocco, for example, Centre Monétique Interbancaire (CMI) cards are frequently issued as entry-level products. Mastercard and Visa make up a large and growing share of the remaining cards in the region outside of Iran and RBR’s report shows that they have made notable gains in Nigeria and Saudi Arabia. This is through both organic growth and agreements for their brands to be added to domestic scheme cards to enable cardholders to use them outside the country of issuance. Cards featuring both a domestic and international brand were most recently launched in Saudi Arabia, where “mada” debit cards were introduced by the Saudi Payment Network (SPAN) in 2015.

BRILLIANT / CNBC

E-PAYMENT REVIEW June 2017

NFC Growth / Some 560m NFC secure elements will be shipped worldwide in 2017, representing a 12% increase from 2016, smart security industry association Eurosmart has revealed. A total of 495m NFC secure elements were shipped in 2015, which increased by 1% in 2016 to reach 500m units.

Credit Suisse using robots to answer compliance questions

The App of God / A growing number of Swedish churches have started taking donations via mobile apps to keep up with Sweden’s rapid shift away from notes and coins. Most of the country’s banks have stopped handling cash; some shops and museums now only accept plastic.

SWISS BANK CREDIT SUISSE HAS DEPLOYED ROBOTS IN ITS OFFICES, some of which are helping employees answer basic compliance questions, the bank's global markets chief executive, Brian Chin told a conference in US. He said the technology may help reduce the number of calls coming into the bank's compliance call centre by as much as 50%, Reuters reported. The technology works like Amazon.com’s Alexa voice system. While Chin called them robots, it was not clear if they had a physical presence or how exactly employees interacted with them. “You ask it questions and it spits out the appropriate regulation, rather than going to a manual or a website,” Chin said. “It’s been really good for simple questions.” He said while technology has allowed the bank to cut back middle office staff, headcount has remained flat because it has hired a large number of programmers.

Tap & Control / Researchers from Carnegie Mellon University’s Future Interfaces Group have developed a working concept that enables smartphones to interact with smart home appliances using electromagnetic emission sensing technology.

ARTIFICIAL INTELLIGENCE

New cloud / Researchers from the Institute of Electrical and Electronics Engineers have proposed a high-performance cluster cloud framework to help manage the mountains of data associated with mobile biometric authentication. The team found that using a cloudbased biometric authentication framework, or BAMCloud, helped to achieve network speed performance of over eight times more than alternate methods.”

In India, cash is putting up a fight DIGITAL PAYMENTS

ON THE NIGHT OF NOV. 9, 2016, a surprise announcement by India’s Prime Minister Narendra Modi demonetized 500 and 1,000-rupee bank notes, essentially removing from circulation 86 percent of the country’s currency. The campaign, as Modi dubbed it, was a war on black money - some $2 trillion of which was estimated to be stashed abroad - and an attempt to set India and its 1.3 billion citizens on track for a cashless future, hopefully putting an end to the country’s parallel underground economy. Six months later, however, data from Reserve Bank of India (RBI) shows that a cashless future remains a long way off. In March 2017, total withdrawals amounted to $35.2 billion, a 0.6 percent increase over the same period in 2016. While the growth was miniscule compared to the 11.4 percent noted in March 2015, cash usage shows no signs of slowing down. “Things are changing, but not really at the pace one would expect,” said Nirupama Soundararajan, an economist at Pahle India, a New Delhi-based political research think tank, who believes that the slow rate of change is also reflective of India’s struggle to adopt digital banking services. India has long been a cash economy. Until November last year, nearly 95

percent of transactions were conducted in cash, with nearly 90 percent of merchants unable to accept any other form of payment. With demonetization, however, the country experienced a massive cash crunch. With the surprise demonetization announcement, ATMs weren’t stocked sufficiently and consumer withdrawals were limited by transaction amount and frequency. Demonetization may not yet be making a significant dent on overall Indian cash usage, but it did give digital payments a jump start. A month after demonetization, daily transaction volume from digital wallets such as Oxigen, Paytm and MobiKwik reportedly went up by 271 percent from 1.7 million to 6.3 million. Even so, March data from RBI poured cold water on proponents of digital payment. The volume of overall digital transactions, which had increased by 42 percent from 672 million in November to 958 million in December 2016, declined by 20 percent to 763 million in February 2017. That is, demonetization led to a sudden increase in use of digital payments in November and December of last year, but then with an increasing availability of cash in spring 2017 digital payments usage again declined in February 2017, the RBI noted.

TECHIVERSARY

50 years of the ATM BIOMETRIC

Mastercard unveils card with scanner

Mastercard is testing out new fingerprint sensor-enabled payment cards that, combined with the onboard chips, offer a new, convenient way to authorize in-person transactions. Instead of entering PIN, you simply place your thumb on your card to prove your identity. They are currently being tested in South Africa, and Mastercard hopes to roll them out to the rest of the world by the end of 2017. Once the technology is ready for the public, you'll have to go to your bank to get your fingers scanned. An encrypted digital template of your fingerprint is stored on the card's EMV chip. The way it works is simple. Put the biometric card into the payment terminal and keep your finger on the card’s reader. Provided everything matches up, the payment will be approved.

From its roots as a basic cash withdrawal machine with limited note selection and withdrawal amount options, to a multi-faceted financial services e-commerce device, the ATM has come a long way. Start the celebration with some Atmia ATM facts.

The world's first automated cash dispenser - later known as an Automated Teller Machine - was inaugurated at the Enfield branch of Barclays Bank in London on June 27, 1967. This device was invented by John Shepherd-Barron and his team at De La Rue Instruments Ltd.

The ATM went online when machines were connected in expanding interbank networks (which reached 200 in number in the USA alone), while card associations like Visa and MasterCard created international card networks for debit and credit card use. This meant ATMs could be used both at interbank and at cross-border level.

. PAYMENT

FIRSTDATA/MASTERCARD/CARDFLIGHT

Mobile Bluetooth card reader

NEXT GENERATION OF SMART PAYMENTS TECHNOLOGY First Data, a US payment technology solutions company has launched a smart payment terminal designed to fit comfortably as a handheld device or on the countertop. Called Clover Flex, it can accept PIN entry, NFC, mag stripe transactions, electronic gift cards, and can process EMV chip cards in less than three seconds. Available for businesses of all sizes, its design makes it ideal for service-based industries that want to take the checkout experience to the customer. Compact enough to be a handheld device, Clover Flex makes it easy to accept payments inline, at the table, on the shop floor, or in the customer’s home. Business owners using Clover Flex can monitor sales remotely on their computer or mobile device through the Clover dashboard.

CardFlight, a mobile point of sale (POS) provider, has launched the Swift B200 and Swift B250, a new series of mobile cards readers utilizing Bluetooth Low Energy connectivity to enable merchants nationwide to accept secure EMV and NFC contactless payments on Android and iOS devices. CardFlight is also among the first mobile payment solution providers to support Consumer Device Cardholder Verification Method (CDCVM), a new contactless payments standard that requires no additional customer action on the payment terminal or paper receipt to for verification, such as a signature or PIN.

By the end of 2014, there were over 3 million ATMs worldwide, 17,000 of them are in Nigeria. According to London-based research group,Retail Banking Research, there’s a new ATM added to the global installed base virtually every three minutes

The ATM Industry Association was founded in 1997 to oversee the global interests of the vast industry spawned by the invention of the ATM. Today, it has grown to over 5,500 members in 65 countries.

The ATM has enabled significant cost reductions, by moving branch staff to value-added activities, and introduced electronic means to identify customers (i.e the PIN).

EE-PAYMENT REVIEW June 2017

Last Word The ATM at 50: Reinvention for a smart future BY MIKE LEE

BRILLIANT / CNBC

S I STOOD BEFORE THE 50TH ATM anniversary memorial display in February at the ATMIA US Conference in Orlando, several special memories of my time in this industry sprang to mind, including an interview back in 2001 with John Shepherd-Barron, the man behind the world's first installed ATM. A sense of pride and nostalgia welled up inside me as I walked down the conference's ATM memory lane. As a technology pioneer who may be considered a principal cofounder of the ATM industry in a collective process of innovation that accelerated in the second half of the 1960s in Europe, America and Japan, Shepherd-Barron certainly deserved his Lifetime Achievement Award from ATMIA in 2006. I'll never forget the explanation he shared with me as to how he originally conceived of the ATM: "If chocolates can be dispensed," he'd asked himself, "then why can't cash?" The simple revolutionary idea behind our worldwide industry is that cash is a physical product - like a chocolate bar - that can be dispensed automatically anywhere, anytime. It was a brilliant flash of insight from this astute thinker, designer and businessman. Shortly before he passed away, Shepherd-Barron testified that he'd used ATMs successfully for more than 40 years. Yes, cash dispensing via a machine works, big time. And cash is always going to be much more popular than chocolate bars. Just consider the production rate of ATMs since 1967 - three million machines manufactured in 50 years averages out to 60,000 per year or roughly 165 ATMs every single day. But 2017 isn't just about a proud history stretching out over half a century. It will be the year in which the ATM will be reborn. This is a time of reinvention that would bring smiles to the faces of Shepherd-Barron and other ATM innovators of the 1960s, such as Lars Arfvidson, whose essay The Swedish Bankomat in the Early History of the ATM is well worth a read, and James Goodfellow, who patented the PIN technology that became the standard customer authentication method for the industry. In fact, the same U.S. conference that honoured the ATM's 50th birthday literally echoed with conversations and discussions - in the exhibition hall, during the presentations and in the corridors - about a new industry RFI for next generation ATMs. It was a unique and energizing experience for me, as CEO of ATMIA, which itself turns 20 this year, to be present at this living convergence of the past and the future. I looked at the ATM memorial display, I held the 50/20 coin in my hand (The 50/20 coin commemorates the 50th anniversary of the ATM on one side and the 20th anniversary of ATMIA on the other), and I listened intently to the excited voices of industry thought leaders, exhibitors, speakers and delegates starting to work out the shape of our industry for the next 25 years. 42

E-PAYMENT REVIEW June 2017

The year 2017 is almost certainly about to become a milestone year in the evolution of the ATM. Here's why: While ATMIA has been preparing its members for the end of support for Windows 7 operating systems in 2020 with detailed roadmaps produced for migrations to new operating systems, the association has studied alternative operating systems such as Android through its Next Generation ATM Architecture Committee. Last year, the committee formed a sub-committee of banks and independent deployers to formulate a vision for the future of ATMs from an operator's perspec-

of the future that can be compared with the deployer vision to produce an industry blueprint for next generation ATMs. A common vision of an ATM ecosystem of the future, based on an app model for ATMs, is slowly emerging. It is this comprehensive blueprint, that will help the industry identify the architecture, standards and systems needed to produce next-generation ATMs at incredible economies of scale. But even if 2017 had not produced a vision of the model for next-generation ATMs, several underlying strengths and drivers of the future would have continued to propel the ATM indus-

A common vision of an ATM ecosystem of the future, based on an app model for ATMs, is slowly emerging. It is this comprehensive blueprint that will help the industry identify the architecture, standards and systems needed to produce next-generation ATMs.

try towards 2040 and beyond. These include: the ubiquity and prime locations of ATMs across the world; the universal acceptance of cash as humanity's most popular payment method for consumer purchases; and the 24/7/365 availability of ATMs. Others are the continued economies of scale in global ATM production; the emergence of the smart ATM as a vital community financial services hub in places with declining numbers of bank branches, and its promise as a crucial hub for the evolving Internet of Things; the vital role cash will play in financial inclusion for the world's two billion unbanked adults; and the existence of an established professional global association to watch over the industry and its members. With these fundamentals in place and with the imminent emergence of an industry blueprint for next-gen ATMs, we are at the crossroads where the past diverges into a positive future. I wear my ATM and ATMIA badges with pride because our industry is already far along the path of future-proofing itself even as it celebrates its first 50 years.

tive (encapsulated in its Industry RFI). At the end of January, ATMIA contacted the world's leading ATM manufacturers, suppliers and service-providers, attaching the RFI and requesting formal feedback. Deployers and vendors alike have been wrestling with the issue of how ATMs should adapt to a mobile internet age in which mobile devices such as the smartphone become the main consumer device connected to an internet that digitizes data, information and even money. An analysis of the feedback from global vendors and suppliers has produced a vendor model

Culled from atmmarketplace.com. Mike Lee is CEO of the ATM Industry Association.

E-PAYMENT REVIEW June 2017